JPMorgan has released a research report stating that unless interest rates spike sharply or market conditions reverse unexpectedly, the local property sector is entering an earnings upcycle.

The bank expects average earnings per share to grow by 5% in each of the first and second fiscal years, while dividends per share are projected to rise by 3% and 4% respectively.

With New World Development (ASX: 00017) announcing its results last week, the earnings season for local property and conglomerate companies has largely concluded.

Aside from Sino Land (ASX: 00083) and Hang Lung Properties (ASX: 00101), most companies recorded earnings growth, with New World Development's core profit also turning positive. Additionally, apart from New World Development, all companies maintained at least flat dividends per share.

Looking ahead to the fourth quarter, the bank believes that the earnings-driven momentum for share prices will diminish, with interest rate expectations and sub-sector dynamics becoming key drivers.

Among sub-sectors, the bank favors Central office the most, followed by retail, residential, and non-Central office, and prefers landlords operating retail leasing businesses over property developers.

Top picks include Swire Properties (ASX: 01972), Hongkong Land, Wharf REIC (ASX: 01997), CK Asset (ASX: 01113), Jardine Matheson, and CK Hutchison (ASX: 00001).

The bank believes that Hong Kong's development property profit margin has bottomed out, rising from 8% in FY2025 to 11% in the first half of 2026, and is expected to remain at 11% in FY2026 before recovering to 16% in FY2027.