[ET Net News Agency, 9 May 2018] HSBC Global Research held an investor luncheon on 7
May in Hong Kong with industry professionals to discuss their latest outlook and potential
opportunities related to the development of Greater Bay Area (GBA).
The research house noted that the base-case assumption for the housing markets in both
China and HK is that home prices will continue to appreciate, driven by the strong GDP
growth outlook for the nine cities in Guangdong province and the scarcity of land supply
in HK, respectively.
Fundamentally, it is believed that industry transformations with a bigger push toward
the service industry are expected to draw population inflow into China, which bodes well
for housing demand, HSBC said. In HK, HBC's view is that better connectivity and expertise
in the service industry will help foster stronger economic growth, acting potentially as a
driver to a rather mature housing market.
With expectations of a detailed implementation plan on the development of GBA to be
announced soon, HSBC believes the GBA theme remains highly relevant when looking at
investment opportunities in the real estate sector. Per the property experts,
collaboration between local governments is crucial to ensuring successful implementation.
In HK, a dedicated policy unit will be set up to harness the full potential of the Bay
area.
In terms of potential upside from the real estate perspective, tax incentives could help
facilitate the flow of people across the border, which would enhance talent mobility.
Within China, the opportunities lie in the significant home price divergence between
Eastern and Western GBA where higher cost efficiency in the West offers growth
opportunities, it added.
Based on developers' landbank exposure to GBA, HSBC 's conviction call is Logan Property
Holdings (03380)(Buy; TP: HK$13.9), which offers the second highest exposure to the region
(72% of GAV). In HK, it said New World Development (00017)(Buy; TP: HK$14.8) is a key
beneficiary related to the GBA development plan amid increasing exposure in Shenzhen and
the border of HK/Zhuhai. (KL)