(Bloomberg) -- Hong Kong’s new proposals to jolt anemic home sales sent Midland Holdings Ltd. shares up by more than 30% this week, and an anticipated sector recovery may empower one of the city’s largest brokers to sustain the momentum. 

The new policies could boost secondary home sales to a 12-year high in 2024 given the low basis last year, Bloomberg Intelligence analyst Patrick Wong estimated. Midland, as the only property agency publicly traded in Hong Kong and thus a proxy of the sector, stands to be a main beneficiary if such recovery comes to fruition. 

With the new measures, sales volume for primary and secondary homes could rise more than 30% in 2024, largely driven by demand from mainland China-born residents and new entrants to Hong Kong, according to a JPMorgan Chase & Co. note.

The city’s policymakers proposed this week pulling back on some measures once enacted to cool the world’s second-most expensive housing market, ranging from suspending a borrower stress test to lowering taxes for foreign and second-home buyers. 

“Secondary home transactions in Hong Kong could surge to boost revenue of property agencies like Midland, as homebuyers are able to sell their units within a short period of time without paying any extra stamp duties,” Wong wrote in a report. He expects the potential volume recovery to help Midland return to profit. The company reported net losses for 2022 and the first half of last year.

Sentiment turned positive internally at Midland as well, Raymond Cheng, an analyst at CGS-CIMB Securities Ltd., wrote after speaking with company representatives this week. Midland now expects primary transaction to increase to a range of 14,000 to 15,000 units in 2024, compared to about 10,000 last year, Cheng said. 

Hong Kong Scraps Property Curbs to Boost Weak Housing Market (4)

Midland will likely continue banking on mainland Chinese buyers, who accounted for 37% of the company’s total transaction value in 2023, compared to about 20% pre-Covid, according to Cheng. 

Some mainlanders “could change to buy if rent rate in Hong Kong continues to increase,” he wrote. 

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