Hong Kong Property Prices

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Posted by walkup (914 days ago)

SCMP Mar 05, 2008
HK Island shows solid price growth
Overall increases strongest in past three years with Taikoo Shing rising 56 per cent
Yvonne Liu

Home prices on Hong Kong island enjoyed the strongest growth over the past three years with flats in Taikoo Shing bouncing back to 87 per cent of their peak values in 1997.

For the period between 2005 and January this year, average prices in Taikoo Shing rose 56 per cent to HK$7,327 per square foot in January, according to data provided by Midland Realty.

It will not be long before homeowners at the 31-year-old Taikoo Shing see their investment return to the peak level of HK$8,406 per square foot hit in July 1997, as agents expect a 20 per cent to 35 per cent rise in residential prices this year.

The findings are based on price movements of 12 key housing estates on Hong Kong island, in Kowloon and the New Territories, each with four developments polled by Midland Realty.

Of the 12 developments, price performance at Hong Kong Gold Coast in Tuen Mun lags behind rivals.

As of January, the average price at Hong Kong Gold Coast stood at HK$4,204 per square foot, 54.88 per cent below the HK$6,207 per square foot recorded in 1997.

"Taikoo Shing will continue to be the most popular housing estate for the middle class in the next few years," said Wong Leung-sing, an associate director of Centaline Property's research department. The lack of new supply of large-scale mass residential projects on Hong Kong island would fuel further price increases in Taikoo Shing, he said.

Patrick Tsang, senior district sales manager at the firm, said Taikoo Shing was the most soughtafter housing estate in Island East.

"The housing estate recorded 90 to 170 transactions per month over the last four months," he said.

"Kornhill is another popular housing estate in Quarry Bay, but the average transaction volume is only half that of Taikoo Shing."

In January, 90 second-hand flats in Taikoo Shing changed hands.

Location is definitely the key determinant to property prices.

Buggle Lau Ka-fai, chief analyst at Midland Realty, believes housing estates on Hong Kong island outperformed Kowloon and the New Territories due to tight supply.

Besides Taikoo Shing, prices at Dynasty Court in Mid-Levels edged up 46.7 per cent to an average price of HK$14,310 per square foot for the three years to January.

Three out of the four housing estates surveyed on Hong Kong island registered price growth above 50 per cent, while in Kowloon, prices at the Arch shot up 57 per cent to HK$16,438 per square foot.

Prices at Parc Oasis in Kowloon Tong registered slower growth of 36 per cent to an average of HK$7,378 per square foot.

"Parc Oasis used to be the [exclusive] large-scale luxury residential project in Kowloon," Mr Lau said.

"But there has been plenty of new supplies of luxury residential properties in Kowloon in the last few years, thus lowering the growth in prices at Parc Oasis."

Mr Wong said: "Hong Kong's core business district is located on [the island], which attracted the high-income group and expatriates. For example, Residence Bel-Air attracted many expatriates.

"Properties on Hong Kong island have higher investment values. That's why the growth in prices was higher than in other areas."

As a result, he said housing estates on Hong Kong island and luxury residential prices recorded higher growth rates after the property market recovered.

Property prices in the New Territories have been laggards for the past few years.

However, Mr Lau expects mass residential properties in the northwest New Territories to achieve higher increases than other areas this year as transportation and infrastructure have improved over the past year.

"Many people would consider moving to the New Territories as property prices in the urban area have risen significantly in last few years," Mr Lau said.

Looking ahead, he expects prices of mass residential flats will rise 20 per cent to 25 per cent this year, while the growth in prices of luxury residential properties will range between 15 and 20 per cent.

Mr Wong predicted prices at Taikoo Shing, luxury residential projects at Kowloon Station and new upmarket developments in the New Territories would be the star performers this year.

"New projects at Kowloon Station have attracted many potential buyers and residents in the Mid-Levels as there's a lack of new supply there," he said.

"They are looking for units near the central business district and with 24-hour clubhouses, the units at Kowloon Station are their only choices."

He suggested home buyers choose projects which managed to achieve the highest transaction prices in that particular district and were most active in the secondary market.

Willy Liu Wai-keung, a managing director at estate agency Ricacorp Properties, expects prices in Pok Fu Lam, particularly Residence Bel-Air, Quarry Bay, Lam Tin and Tin Shui Wai will have the highest growth this year.

Hong Kong Property chief executive Fredy Wu Yat-fat said properties along railway lines would have the higher growth in prices.

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Posted by walkup (905 days ago)

Business WeeK March 14:
Hong Kong's Flu Scare Adds to Property Concerns
The outbreak reminiscent of SARS could curtail the activities of home buyers, resulting in quieter Hong Kong market

by Rita Raagas De Ramos

Although so far contained to affected schools, an ongoing flu scare has brought back memories of Sars.

All kindergartens and primary schools in Hong Kong have been shut down for two weeks starting March 13 because of the outbreak of a flu-like illness, essentially speeding up the start of the children's Easter break. The government decided to issue the order to contain a seasonal flu outbreak and enable experts to look into recent deaths supposedly caused by the virus.

Three children in Hong Kong have so far died with flu-like symptoms, and another child has just been admitted to the intensive care unit in a hospital. Citi notes that on March 12 alone, 23 schools have been affected, with an additional 184 persons getting the virus. In less than a month, about 84 schools in Hong Kong already have been affected, the bank adds.

This flu scare, though so far contained among the schools affected, has brought back memories of the deadly Severe Acute Respiratory Syndrome (Sars) that hit Hong Kong in 2003.

The outbreak could potentially affect the home-viewing activities of homebuyers, resulting in a more quiet market, according to Tony Tsang, a property analyst at Citi. Together with continued weakness in the stockmarket, transaction volume in the secondary market could slow further in March. Sars had a crippling effect on Hong Kong's property market, which took many months to recover.

"With these added uncertainties, bullish expectations of property price increases and transaction volume now built into earnings estimates might not be finally realised, leading to downside in earnings," Tsang writes in a report.

The outbreak is adding to Citi's sell recommendation on Sun Hung Kai Properties and Sino Land. The bank's top pick among the Hong Kong developers are Kerry Properties, which is now trading at 44% NAV discount, and Hang Lung Properties, which has a strong track record of timing the property market.

Tsang has been cautious on the property market in Hong Kong because of increased property supply over the past few months. He notes that supply in the secondary market has increased remarkably with an increasing amount of homeowners and investors releasing their holdings into the market. For example, the amount of units put onto the market for sale in the top 10 benchmark housing estates in Hong Kong has now risen by 29% compared with February levels. Meanwhile, transaction volumes have slowed and individual sellers have softened their asking prices, he says.

Posted by walkup2 (356 days ago)

HK$24.5m for one-bedroom flat sets record
Yvonne Liu
Sep 15, 2009 SCMP

A one-bedroom flat in a luxury development in Tsim Sha Tsui has fetched a whopping HK$30,025 per sq ft, setting a record in Hong Kong.

A Hong Kong businessman who owns a trading firm has paid HK$24.5 million for an 816 sq ft flat on the 56th floor of The Masterpiece for his own use, according to Centaline Property Agency, which concluded the deal. The price is a record for a one-bedroom flat.

The useable area of the apartment is just 590 sq ft, similar to flats in mass residential projects.

Thomas Chan, Centaline sales director, said the buyer was willing to pay the high price because the flat offered views of Victoria Harbour and was centrally located.

In 2007, the average price of one-bedroom flats at The Arch, above Kowloon Station, was HK$17,000 per sq ft.

The 64-storey The Masterpiece in Hanoi Road was developed by New World Development and the Urban Renewal Authority.

It is the second-tallest residential building in Hong Kong after The Cullinan, above Kowloon Station.

The one-bedroom flat is the smallest unit in the project.

"The buyer could get a second-hand luxury flat with at least 1,500 sq ft and three bedrooms in Mid-Levels" for the price, said Koh Keng-shing, managing director at Landscope Surveyors and Landscope Realty.

Even though average prices at housing estates such as Taikoo Shing are still down from their 1997 peak, property agents said luxury residential prices had already exceeded their 1997 levels. The city's most expensive flat is a 7,088 sq ft unit at Branksome Crest in Mid-Levels, which sold for HK$240 million, or HK$39,786 per sq ft, in December 2007.

Flats previously peaked at about HK$20,000 per sq ft in 1997, Koh said.

The most expensive residential property in the city is a 3,300 sq ft house at 8 Severn Road on The Peak, which sold for HK$285 million, or HK$56,800 per sq ft, in June last year, making it the most expensive residential dwelling in Hong Kong and also Asia.

The new luxury developments in non-traditional luxury residential areas such as Tsim Sha Tsui and Kowloon Station are fetching higher prices than apartments in Mid-Levels and other high-end residential areas.

"Those projects have attracted new demand from mainland buyers and local investors, not the local end-users," Tsang said. "Some of the projects are overpriced. It may be risky for the buyers."

Tsang had confidence in the market outlook for luxury residential developments in traditional luxury areas as the supply was expected to remain low in the next few years.

Posted by walkup2 (285 days ago)

Research chief sees prices rising up to 20pc above 1997 levels
PEOPLE IN PROPERTY: ERIC WONG
Peggy Sito
Nov 25, 2009 SCMP

Being a maverick is never easy. Just ask Eric Wong Chun-yu, the head of Asian property research at Swiss investment bank UBS.
Earlier this year, many analysts questioned if the surge in Hong Kong home prices could be sustained in the wake of what remained at this stage a slow and uncertain economic recovery.

Wong stuck his neck out with a prediction that prices would indeed continue to go upwards.

The events that followed showed that Wong made the right call, although he was widely criticised at the time. Indeed, prices are now some 30 per cent up from their troughs reached at the end of last year.

Wong has established a reputation for being something of a property bull since joining UBS 11 years ago. But that does not mean he was unable to see the downside when it emerged and he joined the bears at the end of last year when home prices plunged in the wake of the global financial crisis.

At the time he forecast that prices were likely to fall by a further 20 per cent to 30 per cent by the middle of this year. However, soon thereafter he changed back to a bull when market liquidity improved.

Today, the majority of analysts believe that Hong Kong home prices are inclined to continue going upwards. But Wong is making a more aggressive prediction - forecasting that prices could continue to go upwards until they were some 10 per cent to 20 per cent higher than their 1997 peak levels.

"Home prices will boom in the second half of next year and reach 1997 levels," he said. "But the market is still well valued at that level and we do not see any risk of an asset bubble forming on the basis of low interest rates and limited supply." But even the renowned property bull has some reservations about prices going well beyond this level.

"The market may not be in a such a good situation if the Centa-City Leading Index goes to 110 to 120 points, or 10 to 20 per cent higher than the levels in 1997," he said.

The Centa-City Leading Index is a weekly index based on current preliminary contract prices in Centaline Property Agency. The index sets 1997 prices at 100.

It was 73.91 yesterday, according to Centaline, meaning home prices will rise about 60 per cent before the index could face the risk of seeing property bubbles, according to Wong's forecast. The reasons for price rises so far include huge global money supply, mainland liquidity, and low interest rates that result in lower finance costs.

Wong has also said the housing supply in Hong Kong has fallen to a 30-year low, with a 1.8 per cent to 2.2 per cent vacancy rate, which would help property prices to stay strong. The rise in home prices recently has triggered calls for the government to resume the sale of subsidised Home Ownership Scheme flats.

"I do not want to see the government change its policy and resume the sale of HOS flats based on political pressure. Once that starts, it will never stop," he said.

Posted by walkup2 (278 days ago)

Bulls see 30pc price gains in 2010
Others warn that oversupply in secondary market could keep a lid on residential sector
Peggy Sito
Dec 02, 2009 SCMP

Opinions about the outlook for Hong Kong home prices next year are sharply divided, with the biggest bulls forecasting a repeat of this year's 30 per cent price gains, while others caution that prices have already hit the limits of buyer affordability.
"Property markets in the US, Europe and the Middle East have already suffered from a bursting of a price bubble," said Patrick Chow Moon-kit, research head of property agency Ricacorp Properties.

"Capital has nowhere to go but shift to Asia, and Hong Kong will be the beneficiary. We could see prices rising by more than 30 per cent next year."

But David Ng, head of regional property research at the Royal Bank of Scotland, disagrees.

"The secondary market makes up the bulk of sales in Hong Kong (rising from 56 per cent in 2003 to 88 per cent in 2008), and more accurately reflects overall market sentiment, potential customers' ability to buy and price trends ... and there is an oversupply situation in the secondary market," Ng writes in this week's Concrete Analysis column (see page 2).

"We see little further upside in this market this year and only expect 5 per cent price growth for 2010."

The divergence of views may partly be explained by the different drivers of demand in the primary and secondary markets and the different motives of buyers.

Interest from investors, said Benedict Ma, an associate director of the CB Richard Ellis research team, was likely to remain an important driver of demand next year.

"Given the uncertainty surrounding Dubai's outlook [arising from a request from the Dubai government for a debt standstill], I would not be surprised to see a rise in investor interest in Hong Kong," said Ma.

"This would result in an increase in transaction volumes as well as help support further growth in prices next year," he said, adding that low interest rates, high liquidity and limited new supply had helped lift prices back to levels seen in the third quarter of last year, before the onset of the global financial crisis.

In the mass secondary market, residential property prices have increased about 30 per cent so far this year, while luxury residential property prices have soared 41 per cent, with prices for some new properties scaling record highs.

Even without the benefit of additional investment capital being diverted as a result of the debt scare in the Middle East, Hong Kong remained awash in liquidity that was available to drive the property market, said Eric Yuen Chi-fung, head of research at brokerage Guoco Capital.

A total capital inflow of HK$567.5 billion into Hong Kong was reported from October 1 last year to November 13 by Hong Kong Monetary Authority chief executive Norman Chan Tak-lam, who described the inflow as unprecedented. The capital has found its way into equity and property investments, helping to fuel a rise in prices on both markets.

It was such positive news that helped lure Raymond Liu and his family to visit Hong Kong from their California home to look for a property in a price range of HK$3 million to HK$10 million.

The internet-based trader arrived two weeks ago to buy a unit, partly for investment purposes and partly for his own use.

"We want to diversify our assets out of the US, and we believe the growth rate here is better than in the US market," said Liu.

His wife, Maureen, said the desire to buy a property in Hong Kong was also prompted by long-term retirement plans.

"We will come back to Hong Kong for retirement in about 10 years. Therefore we want to buy in the city now," she said.

Both the Lius were born in Hong Kong but migrated to the US many years ago.

Liu said his was not an isolated case, and many of his friends with Hong Kong backgrounds were now also planning to buy properties in the city.

"Yes prices are high. But who knows what will happen in the future? Prices in the metropolitan areas of the US are still more expensive than many places in Hong Kong," he said.

Peter Churchouse, a director at hedge fund manager LIM Advisors, said demand for properties in Hong Kong would continue to increase, taking into account global markets conditions, economic growth on the mainland, the recovery under way in the Hong Kong economy and the low interest rate environment in the city.

"The US has to keep interest rates low for the time being," said Churchouse. This meant that Hong Kong rates, which move in alignment with US rates to maintain the pegged exchange rate between the US and Hong Kong dollars, would also remain at their current low levels.

However, he was relatively moderate in his expectations for price rises in the property market next year, forecasting a gain of no more than 20 per cent.

"Real estate in Hong Kong is in a pretty good position. But banks will slow the pace of growth," he said.

Since lenders were likely to remain cautious about a price bubble forming in the market, they would initially keep some brakes on loans for the next three to six months.

But a recovery in the economy would then help ease concerns and push property prices up to beyond 1997 record levels in the next 12 to 15 months, Churchouse forecast.

But even were this scenario to unfold, he did not foresee any risk of an unsustainable asset price bubble forming in Hong Kong, which would happen only if prices were to shoot up a further 50 per cent from now and interest rates were to be increased by 400 basis points, eroding buyer affordability.

"We've got a long way to go before we can say there is a bubble in Hong Kong," said Churchouse.

Ma of CBRE expects the luxury residential sector to continue to outperform the mass market, owing to limited new supply as well as strong investor interest.

"Wealthy local investors have been purchasing luxury residential properties for end-use or long-term investment, while mainland Chinese investment has become an increasingly significant factor in the Hong Kong property market," said Ma.

Posted by walkup2 (271 days ago)

Friday, December 4, 2009
Hong Kong Property ‘Good Bet,’ Hang Lung’s Chan Says
Dec. 4 (Bloomberg) -- Hang Lung Properties Ltd. Chairman Ronnie Chan said Hong Kong’s home market is a “good bet,” joining billionaire Lee Shau-kee in forecasting the rally in prices will be sustained.

“Hong Kong will have a shortage of supply in residential in the next couple of years,” Chan said in a Bloomberg Television interview today. Demand from wealthy mainland Chinese will support the luxury market, he said.

Hong Kong’s biggest property developers have remained upbeat as a 30 percent jump in prices this year sparked a public outcry and warnings of a possible bubble. Lee, chairman of Henderson Land Development Co., predicted the market will gain a further 10 percent in 2010 and Sun Hung Kai Properties Ltd. Vice Chairman Raymond Kwok said prices are still “reasonable.” Lee and Kwok both spoke yesterday.

“Everyone’s interpretation of a bubble is different,” Jeff Yau, an analyst at DBS Vickers Hong Kong Ltd., said by phone today. “If you’re talking about speculation, today’s level is very far from what we saw in 1997.” Hong Kong home prices may rise as much as 10 percent next year, he said.

Hong Kong is trying to rein in the real estate market by clamping down on developers’ sales tactics, raising down payments on luxury homes and suspending mortgage insurance for rental properties. Chan spoke after the International Monetary Fund said yesterday that the city’s banks should tighten lending to prevent an investment-asset bubble.

Record-Low Supply

Builders completed 5,500 private homes in the first nine months of the year, the Transport and Housing Bureau said Oct. 23, without giving figures for the same period in 2008. For all of last year, 8,800 homes were finished, the fewest since at least 1997, the bureau’s figures showed.

Hang Lung rose 0.8 percent to HK$30.25 at the midday break in Hong Kong. The stock has gained 80 percent this year, compared with a 68 percent advance in the Hang Seng Property Index, comprised of six of the city’s largest developers.

Henderson’s Lee yesterday said he plans to spend HK$10 billion ($1.3 billion) on Hong Kong property in the next two to three months and another HK$10 billion on government land premiums for a project at Wu Kai Sha, north of the city center.

To ease the supply shortage, the city government will sell two sites in the Tai Po district by auction on Dec. 28. It last sold a residential building site on May 5, for a higher-than- estimated HK$61 million, so far the only auction in the fiscal year that started April 1.

Hang Lung Purchases

Hang Lung may resume buying land in the city “if there is a repeat of 1999,” Chan said, without elaborating. The developer last bought land locally in 2000, he said.

“We always like to buy when there is nobody around,” Chan said. “Right now, too many in Hong Kong want to buy land.”

The Hong Kong government, the city’s largest supplier of land for development, has adjusted supply to deal with changes in the property market.

In November 2002, it suspended scheduled land sales as home prices fell continuously after the 1997-98 Asian financial crisis, the 2000 bursting of the dot-com bubble and the Sept. 11, 2001 terrorist attacks. It resumed sales in January 2004, introducing a system of selling land through auctions only after developers promise to pay a minimum amount, part of an undisclosed reserve price.

Hang Lung will buy more land in China, where investment returns are better, Chan said. The mainland’s commercial property market is “a better bet” than Hong Kong’s, he said.

---With assistance from Mark Lee and Momoe Ikeda-chelminska in Hong Kong. Editors: Joshua Fellman, Frank Longid

Source: bloomberg.com/

Posted by walkup2 (257 days ago)

Deals surge 50pc ahead of auction
Transactions in Hong Kong rise as buyers expect strong sale of waterfront sites in Tai Po
Sandy Li
Dec 23, 2009 SCMP

Hong Kong home sales surged last week as end-users and investors raced to close deals ahead of an expected strong outcome at the auction next Monday of two prime waterfront sites in Tai Po.
"Transaction volumes in the secondary market jumped 50 per cent from a week earlier," said Patrick Chow Moon-kit, a research head at Ricacorp Properties, who attributed the surge to optimistic market forecasts that the first major land sale in two years could set a new record land price in Tai Po and boost home prices.

Surveyors and property consultants expect the two adjacent 2.1-hectare sites in Pak Shek Kok to fetch between HK$10.4 billion and HK$12.4 billion.

That would translate into an accommodation value of between HK$7,000 and HK$9,000 per square foot, assuming the construction on each site of low-density residential blocks offering a total gross floor area of 720,757 square feet.

Paul Louie, the regional head of property research at investment house Nomura, forecast that winning bidders would need to price their projects at about HK$8,000 per square foot just to break even on their development costs.

"And if owners at Robinson Road in Mid-Levels see the prospect of prices in Tai Po rising to this level, they are likely to immediately raise their asking prices to HK$9,000 per square foot. So the outcome of the land auction will be used as a new benchmark for the Hong Kong residential market, since we have had no big land sale since 2007," said Louie.

Against this background, property agents said sales volumes and prices in the New Territories, particularly in Sha Tin and Tai Po, recorded faster growth than all other areas last week.

"Transactions in Hong Lok Yuen in Tai Po are becoming more active, with 10 deals concluded last week, compared with just two to three per week before the announcement of the land auction," said Chow.

In Hong Lok Yuen, prices surged 10 per cent to HK$7,200 per square foot from HK$6,500 per square foot in October - a month before the two sites were triggered for auction.

Some investors were using the sharp rise in prices to "flip" their luxury flats for a quick profit, said Raymond Chan, the sales director at Midland Realty's Sha Tin and Tai Po branch, while others were buying into the market in the hope of making a quick return.

One investor bought three flats at Royal Ascot in Sha Tin for a combined HK$30 million last week, he said, while another pocketed a gain of HK$3 million from reselling a 3,240 square foot house in Constellation Cove in Tai Po for HK$31 million last week after he bought the house last month.

"It shows buyers are willing to pay a bigger premium even though sellers are aggressive in raising prices," said Chan.

Adrian Wong, a sales director at Centaline Property Agency's New Territories East branch, said transaction volumes in luxury residential units in Tai Po were up 30 per cent this month compared with last month.

Homes in Deerhill Bay, a completed luxury residential development close to the two sites up for auction, were sold for HK$6,500 per square foot and HK$8,000 per square foot, while a house in the development recently changed hands for HK$13,000 per square foot.

"Some owners have revised their asking prices upwards by 5 per cent or withdrawn them awaiting the outcome of the land auction," said Wong.

Meanwhile, some end-users are taking a wait-and-see attitude, as they are unsure whether prices will continue to rise.

Ernest Kong, who has been looking to buy a flat for the last three years, leases a 700 sq ft unit in Tseung Kwan O for HK$8,000.

"I had intended to buy a unit by the year-end, but prices rose faster than my expectations," he said.

Kong is searching for a unit in the same area at a budget of HK$2.5 million and hopes that even if the two sites in Tai Po fetch stronger than expected prices, this will have little impact on his target market, since he is not looking for a luxury flat.

Alice Lam, who lives in a 700 sq ft unit in Tai Po that is more than 20 years old, said her flat's value had so far not been affected by expectations of a positive outcome at next week's auction.

Posted by Ed (243 days ago)

Will the China property bubble pop?

Beijing, China (CNN) -- When Crystal Zhang decided to buy a house last August, it seemed like a no-brainer.

For years, she had been spending a big chunk of her salary renting a studio apartment in Beijing, where she works as a mid-level executive in a multinational company. But her landlord kept hiking the rent, so she found a second-hand apartment and plunked 640,000 RMB (nearly US$100,000) as 52 percent down payment for a new home. She now lives in a cozy, one-bedroom flat and sets aside 25 percent of her monthly salary to pay for mortgage. "I hope to pay all up in five years," says Zhang. "By then I can start making some other investments."

Zhang, 30 and single, is one of the fortunate ones. The upwardly mobile professional has ample disposable income--and a good sense of timing. In just five months since she bought her 85-square-meter apartment, it has already appreciated by 38 percent. "I'm glad I bought this one when I could still afford it, even though its price was already high," she said. "Now the price is ridiculously high."

In big cities like Beijing, the red-hot real estate market has seen prices raise more than 50 percent the past year -- six times the country's total economic growth rate. According to Shanghai Uwin, which tracks housing prices in China's richest city, average new apartment prices in the Pudong district soared by 57 percent to a record $4,061 per square meter, while overall prices in the city rose by 26 percent to $2,434.

Andy Xie, former Morgan Stanley chief economist for Asia, believes that China's real estate and stock markets are a "bubble" that will burst when inflation accelerates in 2011. "China's asset markets are a Ponzi scheme," Xie told Bloomberg. "Property is heading for one huge bust that will take a year and a half to unfold."

Even some real estate developers are getting anxious. Zhang Xin, CEO of SOHO China, agrees that the soaring prices are unsustainable, breaking ranks with other real estate tycoons. "When one gets fat, you need to cut weight" she told Forbes recently. "But this is like you haven't started losing weight yet and food is coming again."

Other analysts also see a bubble, at least in terms of affordability. "Even Chinese government statistics point to real affordability problems, with the income-to-price ratio in Beijing hovering at 1:22, when the IMF and the UN say the ideal figure is 1:3 or 1:4," said Ashley Howlett, head of China construction practice for Jones Day. "The fact is that the average people cannot afford to buy apartments in Beijing or other major cities."

Not all analysts share Xie's dire prognosis. Real estate bosses, and some economists, think there is still room for growth, assuming that China's rapid urbanization will continue.

Mei Jianping, professor of finance at the Cheung Kong Graduate School of Business in Beijing, believes that, "under the current low interest rates, the bubble is unlikely to burst, unless we have another crisis like last year or inflation suddenly surge.

"China is unique in the sense that there is nowhere for the middle class to put their money, low interest rates are low, equity markets are highly volatile, and corporate bond markets are small," Mei said. "So putting money in real estate is not all irrational."

More http://edition.cnn.com/2009/BUSINESS/12/30/china.property.bubble/index.html

Posted by walkup2 (158 days ago)

Henderson Has Explained Uncompleted H.K. Home Sales (Update1)
March 31, 2010, 9:11 AM EDT

By Chia-Peck Wong

March 31 (Bloomberg) -- Henderson Land Development Co., the Hong Kong developer that sold an apartment for a world record price, said it explained to the government why only one of 25 sales in the development was completed.

Henderson complied with a deadline today to provide information on the deals at its luxury project, 39 Conduit Road, including a duplex the company said in October was sold for a world record HK$88,000 ($11,334) a square foot, said company spokeswoman Bonnie Ngan. The developer, controlled by the city’s second-richest man Lee Shau-kee, included sales of the apartments in its profit for the 18 months ended in December, it said yesterday.

“We let some buyers delay transaction by between two and four months, because of the government’s decision to tighten mortgage level for luxury homes,” Ngan said in a telephone interview today, citing the company’s reply to the government. The transactions involve “real money” and the buyers do not have a special relationship with Henderson, Ngan said.

Responding to an outcry over rising property prices last year, Hong Kong raised down payments on luxury homes to 40 percent from 30 percent in October and clamped down on marketing techniques. The apartment Henderson said was sold for a record - - based on usable space excluding common areas -- was listed on the 68th floor while it was actually on the 45th. Floor numbers are often skipped in Hong Kong to avoid ones considered unlucky.

Rare Clarification

The Lands Department has received a written reply from Henderson and “the government is studying it,” Teresa Sair, a department spokeswoman, said by phone today.

“It’s quite rare” for the government to seek clarifications on property sales, David Ng, a Hong Kong-based analyst at Royal Bank of Scotland Plc. This “shows the government is serious about scrutinizing luxury property transactions.”

Buying from rich mainland Chinese and near-zero interest rates on savings deposits fueled a 45 percent jump in prices of luxury homes in 2009, real estate broker Savills Plc said earlier this year. Luxury homes in Hong Kong are typically defined as those costing more than HK$10 million each or are bigger than 1,000 square feet (92.9 square meters).

The sales price for the project at 39 Conduit Road is “reasonable,” Henderson’s Ngan said.

Delayed Completion

Completion on sales of 24 units at 39 Conduit Road has been extended by between two and four months from February, at the request of buyers, the company said.

“Currently, there are no reasons to believe that the sale of such 24 units would not proceed,” the company said. Should the sale fail to go through, Henderson would record a loss of about HK$780 million from forfeiting deposits, without accounting for resales, it said.

Lee said in October that the sale of the record-price duplex was “100 percent real.” He said this month all 25 transactions at 39 Conduit Road were genuine, the South China Morning Post reported March 20.

Apartment Sales

The Lands Department sent a second letter to Henderson on March 25 after the developer said it verbally agreed with the buyers to delay completion, according to an official statement.

Sales of the 25 apartments were included in the 18-month revenue of HK$15.2 billion, Henderson said yesterday. Revenue from the 25 homes was HK$3.28 billion and net income from the sale of the apartments would be HK$973 million, the developer said.

Hong Kong developers sell homes that aren’t yet finished, booking income when construction is completed.

The Hong Kong government has since October raised the down payment on homes costing more than HK$20 million and will from April 1 increase stamp duty on luxury homes to deter speculators amid concern that prices are inflated. The number of homes costing at least HK$10 million sold in February more than tripled to 546 from a year earlier, Land Registry figures show.

Average Prices

The average sale price of existing luxury homes this month is HK$11,823 a square foot, 8.2 percent higher than December’s HK$10,931, according to transactions at 30 key luxury projects, Centaline Property Agency Ltd., one of the city’s biggest property agencies, said in a March 18 report.

Hong Kong developers are optimistic about the property market even with the government’s measures.

“Better affordability supported by the prevailing low mortgage rate, as well as tight primary housing supply in the pipeline, will fuel further growth in the local residential property market,” Henderson Chairman Lee said in yesterday’s statement.

His comments echo those of Li Ka-shing, Hong Kong’s richest man, who said yesterday the city’s property market is expected to “remain stable and positive in the medium to longer term.” Li’s Cheung Kong (Holdings) Ltd. said 2009 profit rose 53 percent on higher home sales and values of investment properties.

Sun Hung Kai Properties Ltd., the Hong Kong-based developer that is the world’s biggest by market value, said this month the city’s housing market may see “another good year” in 2010.

Shares Fall

Lee, ranked by Forbes Magazine this month as Hong Kong’s second-richest man, said in December he planned to spend HK$10 billion on property in coming months and another HK$10 billion on government land premiums for its Wu Kai Sha project.

The 82-year-old was estimated by Forbes to be worth $18.5 billion, behind Li Ka-shing.

Henderson’s shares fell 4.2 percent today to close at HK$54.70. The stock has dropped 6.3 percent this year, after more than doubling in 2009. The Hang Seng Property Index that tracks the seven biggest developers traded in Hong Kong has gained 0.5 percent this year.

--With assistance from Sophie Leung in Hong Kong. Editors: Andreea Papuc, Nerys Avery

To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

Posted by walkup2 (19 days ago)

'My flat has already gone up by 10pc, so if prices drop I am OK'
Peggy Sito SCMP
Aug 18, 2010
C. L. Kong says he is unfazed by the government's latest round of measures aimed at cooling down Hong Kong's red-hot property market.

The public relations executive signed a preliminary agreement to buy a two-bedroom flat in Tseung Kwan O in May with the formal contract due to be completed by the end of this month.

Kong said he would complete the deal and was not thinking of selling in the short term.

"I need somewhere to live," he said.

Rising rents and strong demand have also bolstered confidence in the property market.

"Demand for flats remains very strong. A lot of home seekers visited the estate where I currently live over the weekend," Kong said.

"I live in a similar apartment to the one I am buying, which costs me HK$8,000 a month. The lease will be up soon and I expect the rent will be raised to HK$9,000 or HK$10,000," Kong said.

He added that the amount he was now paying in rent every month was similar to the mortgage he is taking out.

In the short term, he believes prices may see a modest correction because of the new measures.

"The price of the flat I have bought has already gone up 10 per cent, so even if home prices drop 5 to 10 per cent, I am still OK," he said.

Property owner Sandra Liu is even more optimistic. She bought a two-bedroom flat in City One Sha Tin for about HK$2.5 million in May. At today's market prices it would fetch about HK$3 million, but she has no intention of selling it right now.

"Analysts expect the stock market will see a rebound by the end of this year. History shows that property prices will rise after a surge of the stock market. I will wait until the end of this year," Liu said.

Patrick Chow Moon-kit, head of research at Ricacorp Properties, said Kong and Liu were typical of many optimistic buyers and sellers in town.

"They do not expect the measures will deal a blow to the market," Chow said. "Buyers hope to take this opportunity to pick up a bargain, but sellers do not want to cut prices substantially."

His agency's data showed that there were 436 preliminary sales and purchase agreements signed during the week from August 9 to August 15, down 14 per cent on the previous week. He expects a further decline of 10 per cent in sales volume in the secondary market this week.

But not all investors are sitting tight. Kelvin Li, sales manager at Hong Kong Property Services (Agency), cited a case of an investor selling a flat in City One Sha Tin for HK$1.9 million, HK$100,000 below his previous asking price.

Another investor agreed to cut the asking prices of three flats by as much as 10 per cent but has not yet attracted buyers, Li said.

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