As the world is worrying over Trump’s tariffs and the Iran-Israel war, many HK-listed property developers have been moving under the radar. Their recovery had been strong with potential for further growth.
| Company | Ticker | YTD Returns* |
|---|---|---|
| Kerry Properties | 683 | 33.49% |
| Hang Lung Group | 10 | 27.78% |
| Hang Lung Properties (HLP) | 101 | 23.16% |
| Swire Properties Ltd | 1972 | 26.77% |
| China Jinmao Holdings Group Limited | 817 | 26.32% |
| Sun Hung Kai Properties Ltd (SHKP) | 16 | 22.70% |
| Henderson Land Development Co | 12 | 19.22% |
| CK Asset Holdings Ltd | 1113 | 11.84% |
After looking through their financial reports, there are a couple of themes that emerged which we should take note of.
1. Macroeconomic Headwinds Still Weigh on the Sector
First, macroeconomic headwinds continue to weigh heavily on performance. All companies acknowledge either subdued demand or weakened market confidence across Hong Kong and the Mainland, citing high interest rates, soft consumption, and global geopolitical uncertainty. In Mainland China, developers like China Jinmao and Kerry describe the market as still “bottoming out,” with year-on-year declines in both sales area and transaction value. Hong Kong’s office and retail sectors are broadly described as “subdued,” with oversupply and changing consumer/tourist behavior dragging down rents and occupancy.
2. Rental Income Holding Up as Development Sales Decline
Second, a clear divergence is emerging between sales and rental income. Most developers reported steep declines in property development revenue or profits—SHKP and Hang Lung, for example, saw major drops in sales. In contrast, rental income and investment property segments are holding up better, with some even growing modestly (e.g., Swire, SHKP, CK Asset), reflecting the resilience of high-quality commercial assets. The companies are increasingly leaning on these recurring income streams to stabilize earnings.
3. Policy Support and Hope for a 2025 Rebound
Third, policy support and optimism for 2025 recovery are widespread. China Jinmao and Swire view late-2024 policy shifts in the Mainland as potential turning points, expressing hope for a rebound in 2025 driven by domestic demand and government stimulus. However, most companies remain cautious in the near term, maintaining conservative financial discipline—prioritising cash preservation, deleveraging (as seen in Kerry and SHKP), and limiting capital expenditures.
4. Sustainability and Long-Term Vision Remain Priorities
Fourth, sustainability and long-term investments are emphasized despite near-term softness. Several developers, such as Henderson, CK Asset, and Hang Lung, highlighted ESG commitments, sustainability frameworks, and long-term strategic project completions as key pillars of their forward plans. For example, Swire is pushing ahead with a HK$100 billion investment strategy despite reporting fair value losses and a decline in profits.
Same Market, Different Results
These companies have largely similar operation locations and portfolio diversifications. However, their performance is drastically different. Only Henderson Land, China Jinmao Holdings and Kerry Properties achieved profit growth in FY24. While some of them have decreased profits but their net gearing ratio are well managed like Sun Hung Kai and CK Asset. Picking an investment from them would require a balance of individual preferences and risk profile.
1. Kerry Properties (SEHK:683)
Kerry Properties is a premium property developer based in Hong Kong with a strong presence in both Hong Kong and Mainland China. It focuses primarily on high-end residential, commercial, and mixed-use developments. Notable projects include Kerry Centre in Hong Kong and large-scale luxury developments in Shanghai, Beijing, and other Tier 1 cities. The company follows an integrated model that combines property development, hospitality, and logistics, often leveraging synergies with sister companies under the Kuok Group such as Kerry Logistics.
2. Hang Lung Group (SEHK:10)
Hang Lung Group serves as the holding company of Hang Lung Properties and primarily functions as a strategic investment vehicle. While it does not directly engage in property development, it plays a significant role by overseeing and directing the broader corporate strategy of Hang Lung Properties. The Group derives most of its income from its controlling stake in Hang Lung Properties, supplemented by other investment holdings such as securities and financial assets.
3. Hang Lung Properties (HLP) (SEHK:101)
Hang Lung Properties (HLP) is a leading property developer focused on high-end commercial real estate in Mainland China and Hong Kong. The company is best known for its luxury shopping malls and office complexes in Mainland China, particularly under the “66” brand, such as Plaza 66 in Shanghai and Center 66 in Wuxi. In Hong Kong, it owns notable commercial assets including Standard Chartered Building. HLP adopts a long-term, rental income–focused model, generating steady cash flows from its portfolio of investment properties. Its strategy centers on premium retail developments in China’s top-tier cities, targeting affluent consumers and global luxury brands.
4. Swire Properties Ltd (SEHK:1972)
Swire Properties is a leading developer and asset manager of high-end commercial and mixed-use properties in Hong Kong, Mainland China, and selected overseas markets. It is known for landmark projects such as Pacific Place and Taikoo Place in Hong Kong, and the Taikoo Li and Taikoo Hui retail-office complexes in cities like Beijing, Chengdu, Guangzhou, and Shanghai. A subsidiary of the Swire Group, the company is recognized for its placemaking approach, combining architecture, community engagement, and sustainability. It has a large recurring rental income base, supported by a high-quality tenant mix, and maintains a conservative financial profile with a focus on long-term value creation.
5. China Jinmao Holdings Group Limited (SEHK:817)
China Jinmao is a state-owned enterprise under Sinochem Group, specializing in large-scale urban development and high-end real estate projects across Mainland China. It operates with a unique “city operator” model, working closely with local governments to transform urban districts into modern, integrated communities. Its portfolio includes landmark developments such as the Jinmao Tower in Shanghai and a range of mixed-use city clusters. Jinmao’s business model combines high-end residential sales, commercial leasing, and long-term urban regeneration projects, focusing on Tier 1 and 2 cities. Its strategic backing by a central SOE gives it privileged access to land and funding.
6. Sun Hung Kai Properties Ltd (SHKP) (SEHK:16)
Sun Hung Kai Properties (SHKP) is the largest and one of the most influential property developers in Hong Kong. It operates a vertically integrated model covering land acquisition, development, construction, property management, and investment. Its extensive portfolio includes major commercial assets like the International Finance Centre (IFC), International Commerce Centre (ICC), and large-scale shopping malls such as New Town Plaza. SHKP also holds one of the largest residential land banks in Hong Kong.
7. Henderson Land Development Co (SEHK:12)
Henderson Land is a major property developer in Hong Kong with a diversified portfolio encompassing residential, commercial, and hotel properties, as well as infrastructure projects and utilities. It is particularly active in land assembly and redevelopment, especially in the New Territories, where it has amassed significant land holdings. Notable projects include The Henderson (a new premium office tower in Central) and various large-scale residential estates.
8. CK Asset Holdings Ltd (SEHK:1113)
CK Asset Holdings is the flagship property arm of Hong Kong tycoon Li Ka-shing’s empire, spun off from the former Cheung Kong Holdings. It is one of the most internationally diversified Hong Kong developers, with real estate and infrastructure investments spanning Hong Kong, Mainland China, the UK, Singapore, Australia, and Canada. Besides residential and commercial development, the company has expanded into infrastructure, energy, and utilities through acquisitions like UK pub operator Greene King and stakes in global energy firms.
Rethinking Investments in Property Developers Fundamentally
It is still common to see investors obsessed over China’s housing prices, housing starts data, etc. to forecast a recovery in the industry. I believe that these are not indicative of a recovery anymore. The reason is because there is a structural change in China’s real estate demand and supply dynamics, especially in the residential houses.
Statistically, there are more than 1 house per person in China. Furthermore, population gap between generations suggests that there will be lesser demand of housing in the future. Moreover, the Chinese government is not here to save the indebted developers, they are here to build back a healthy real estate market which does not equate to pushing prices up.
In summary, demand looks to continue to shrink, and supply is elevated. Prices for housing will inevitably fall or remain low. This will likely be the new norm, thus looking for rebounds in macro-economic data is meaningless. Therefore, if the developers keep leverage ratio in check and maintain rental reversions, they are likely doing well. A growth in sales would be a plus in the current climate.
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