Fitch released a research report stating that it is expected that residential prices in Hong Kong will increase in the mid single digits by 2025, while prices in Kowloon East and the New Territories may lag behind due to oversupply. Fitch pointed out that it currently prefers real estate stocks with attractive yields and strong fundamentals, including Sun Hung Kai Properties (00083), Link REIT (00823), Swire Properties (01972), and New World Development (00016). Fitch expects that in the first quarter of the first half of 2025, the most favorable interest rate will return to 5%, resulting in a mortgage rate of 3.25%, while the current rental yield for residential properties is 3.65%, which will achieve a positive differential. A reduction in mortgage rates of nearly 100 basis points could release 10% of affordability. Fitch anticipates that property prices in Hong Kong will increase by mid single digits in 2025, but considering the current inventory level of new units reaching as high as 22,000 units, with an additional 26,000 new units expected in the fourth quarter of 2024 and in 2025. The above supply is mainly concentrated in Kai Tak and the New Territories, and a large supply may suppress rental rates and property prices in the area, while units in prime locations may recover first. The research report indicates that due to structural adjustments in Hong Kong's retail market and unfavorable exchange rate effects, Fitch expects retail sales in Hong Kong to remain weak in 2025, with a possible low single digit year-on-year decline. In addition, Hong Kong will experience a peak period of office deliveries in the next two years, with nearly 3.3 million square feet of rentable area in 2025, and an additional 2.2 million square feet in 2026. If there is no net absorption, the additional supply could lead to an increase in the office vacancy rate to nearly 20%. Fitch expects office rents to continue to decline by mid single digits annually, but it gives a "buy" rating to Henderson Land and Swire Properties, reflecting their defensive balance sheets, as well as growth in businesses outside of Hong Kong.