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Hong Kong’s new home registrations surged 34 percent year on year to 12,500 units in the first half of 2026, hitting a 22-year high, according to Citi research.
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The strong performance marked the best first-quarter result since the post-SARS rebound in 2004.
Citi expects registrations to soften temporarily in July due to market caution over China’s Outbound Direct Investment (ODI) rules. Transaction activity has slowed in recent weeks after a strong first quarter, as developers cut new launches amid a local equity correction and buyer hesitation over ODI uncertainty.
The research noted that the robust first-half sales provide support for developers’ share prices. However, recent corrections were driven by expectations of higher US interest rates, concerns over ODI regulations, and a shift in valuation back to a dividend-yield basis.
Citi estimates that China’s ODI rules pose only a 5 to 7 percent downside risk to primary sales volume. Share prices are likely to remain volatile through July as the market digests these concerns.
For the second half of the year, the bank expects support from recovering development margins and stronger cash flow with lower gearing, thanks to solid first-quarter sales.
Citi remains fundamentally constructive on Sun Hung Kai Properties, citing its dividend per share upcycle, improving margins, strong asset turnover and rising rental income from new projects such as International Commerce Centre.
Under macro uncertainties, the bank prefers net cash developers such as CK Asset (1113) and Sino Land, which are better placed than higher-leverage peers.
It also favors companies with dividend growth tied to earnings — such as Sun Hung Kai Properties and CK Asset — or those with potential for special dividends, over those with fixed dividend policies.
Citi’s top picks in the Hong Kong property sector are Swire Properties, Sun Hung Kai Properties, CK Asset, and Link REIT.
