HK housing sector 'good bet', mainland 'better'
Updated: 2009-12-05 06:51
(HK Edition)
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HONG KONG: Hang Lung Properties Chairman Ronnie Chan said Hong Kong's home market is a "good bet".
"Hong Kong will have a shortage of supply in residential property in the next couple of years," Chan said in a Bloomberg Television interview on Friday, adding that demand from wealthy mainlanders will support the luxury market.
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.
"Everyone's interpretation of a bubble is different," Jeff Yau, an analyst at DBS Vickers Hong Kong Ltd, said Thursday. "If you're talking about speculation, today's level is very far from (lower than) what we saw in 1997." As for the current trend, Hong Kong home prices may rise as much as 10 percent next year, he said.
To make sure things don't get out of hand, as they did in 1997, Hong Kong is trying to rein in the real estate market by clamping down on developers' sales tactics, raising downpayments on luxury homes and suspending mortgage insurance for rental properties. Chan spoke after the International Monetary Fund said Thursday that the city's banks should tighten lending to prevent an investment-asset bubble.
Construction data suggest the supply side of the market has yet to show signs of a bubble glut: Builders completed 5,500 private homes in the first nine months of the year, the Transport and Housing Bureau said October 8. For all of last year, 8,800 homes were finished, the fewest since at least 1997, the bureau's figures showed.
Nonetheless, optimism about more growth prevails among some developers. Henderson Land's Lee Shau-kee said on Thursday 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 further ease the supply shortage, the city government will sell two sites in the Tai Po district by auction on December 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 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," he observed.
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 September 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.
Chan also said Hang Lung will buy more land on the mainland, where investment returns are better. The mainland's commercial property market is "a better bet" than Hong Kong's, he said.
China Daily/Bloomberg News
(HK Edition 12/05/2009 page5)