The Real Deal New York

Hong Kong’s real estate stocks aren’t keeping up with housing prices

Concerns over continued price growth have investors playing defense
March 21, 2018 03:30PM

Hong Kong, China

Hong Kong housing prices are still going through the roof, but investors’ concerns over how much room the property market has to run are keeping developers’ stock prices lagging behind.

Home prices in the city jumped nearly 17 percent last year and have nearly tripled since 2009, the Wall Street Journal reported.

But despite strong sales, stock prices for major developers are trading at an average discount of 40 percent to their net asset value. That’s been true for much of the past decade, after stocks traded close to book value in the late 1990s, when property prices saw their last peak.

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Global investors are showing doubts regarding pricing growth, especially as the threat looms of rising interest rates. And stocks have gone from being growth plays to defensive bets partly because developers’ profits are shifting away from sales to growing rental portfolios, the Journal reported. [WSJ]Rich Bockmann