Analyst predicts 10% drop in Hong Kong's home prices this year

But prices to rebound in 2014.

According to Macquarie Equities Research, its current assumptions for the HK residential market are a 10% price decline in 2013, flat in 2014 and 5% rebound in 2014. 

Here's more:

For offices, our cap rates on net rental applied to most assets are between 3.25% and 3.75%. For retail, we use 3.25% to 4.25%. Even if we raise the cap rate by 75bps, downside risks to NAV are 1% to 4.5%.

If we cut the property price by 10% in 2014, downside risks to NAV are 3% to 7.5%. As developers are currently trading at close to a 40% discount to our NAV estimates, the theoretical maximum downside to stocks should be only 7% even if both scenarios materialize.