Hong Kong will have high housing inventories and will likely focus on destocking in the coming years, according to S&P Global Ratings.
"Developers will face further margin pressure because they will be booking residential projects acquired back when land prices were higher,” said S&P Global Ratings credit analyst Edward Chan.
The weighted average earnings before interest, taxes, depreciation, and amortisation margin could edge down further to 34.9% by their fiscal year 2026. Home prices should stabilise next year after losing nearly 30% from a 2021 peak. S&P also forecasts primary sales to reach 20,000 units in 2025.
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However, that compares to 21,000 completed units in inventory as of September 2024. New supply over the next years may exceed 80% of the government's 10-year private home target. "To control their leverage, rated Hong Kong developers will likely remain selective in land acquisitions," said S&P Global Ratings credit analyst Wilson Ling.
