UBS stated in a research report that the Hong Kong government's latest budget announcement, delivered yesterday (25th), contrasted with market expectations. Instead of introducing positive stimulus measures for the residential property market, such as allowing MPF withdrawals for home purchases or reducing stamp duties, the government announced an increase in the ad valorem stamp duty for residential properties valued over HK$100 million, raising the rate from 4.25% to 6.5%. UBS anticipates this measure will adversely affect luxury residential developers. Among the stocks covered by UBS, WHARF HOLDINGS holds the largest portion of ultra-luxury residential properties in Hong Kong, accounting for 17% of its net asset value. This is followed by KERRY PPT at 6%, HENDERSON LAND at 4%, and SHK PPT at 2%. As this is the first tightening measure proposed since 2018 (when the vacancy tax was suggested), UBS interprets this as a signal that the Hong Kong government's policy stance towards the property market has shifted from supportive to more neutral, or even slightly negative. Considering Hong Kong's continued tight fiscal situation, UBS expects the government may launch more land sales via tender to generate revenue, which could potentially limit the long-term upside for residential property prices. UBS also anticipates further updates on the Public Rental Housing tenant purchase scheme in the Policy Address during the third quarter of this year. Furthermore, the budget proposal outlined the sale of nine residential sites in the 2026/27 fiscal year, which could yield approximately 22,000 units. UBS believes the government will slow the pace of land sales when the residential market is weak; however, the pace could accelerate if the market experiences a strong recovery. Nevertheless, given the ample land bank available for sale in the Northern Metropolis, the likelihood of a sharp rebound in residential prices appears low. The budget also reaffirmed a commitment to promoting the interconnection of real estate investment trusts and proposed amendments to facilitate REIT privatizations or restructurings. Additionally, REITs seeking listing will receive a stamp duty exemption when injecting non-residential properties. UBS expects these measures will be slightly positive for LINK REIT and FORTUNE REIT. The bank views the budget as favorable for REITs. UBS maintains a positive outlook on LINK REIT, citing an attractive risk-reward profile, a dividend yield of approximately 7%, an expected gradual improvement in tenant sales and renewal rents in the second half of this year, and potential unit buybacks. Conversely, the bank suggests that Hong Kong property stocks might face profit-taking activities and could underperform the market following a strong start to the year.