UBS analyst John Lam, who correctly predicted Evergrande's collapse, now declares China's property downturn is losing steam. The veteran analyst points to artificial intelligence as a key driver, noting industrial profits rose in Q1 buoyed by computing and equipment sectors benefiting from the AI boom. This wealth effect could snap the negative feedback loop of dwindling profits and weakening sentiment that has plagued the market.

Lam predicts price stabilization in China's tier-one cities, rising used home sales, and soaring developer stocks. He upgraded four companies exposed to these cities to "buy," including China Overseas Land & Investment Ltd, which he sees jumping to HK$25—a 57% increase from recent levels. His view joins a consensus at global banks including Citigroup, Bank of America, and JPMorgan that the market is finally reaching a bottom.

The recovery will likely begin in tier-one cities where Lam expects prices to stabilize this year before rising 2% next year. Tier-two cities won't see prices stop falling until 2025. Despite potential fluctuations, investors face a compelling opportunity as a Bloomberg gauge of the property sector has lagged broader benchmarks in Hong Kong and mainland China, missing out on the late 2024 rally that could now extend to real estate.