News / Asia

Asia's Wealthiest Man: HK Property Speculators Beware

Chinese tycoon Li Ka-shing in front of Hutchison Whampoa company logo, Hong Kong, March 26, 2013.
Chinese tycoon Li Ka-shing in front of Hutchison Whampoa company logo, Hong Kong, March 26, 2013.
Reuters
A series of tightening measures have put the brakes on Hong Kong's overheated property sector, forcing developers to cut prices and prompting a warning from Asia's richest man Li Ka-shing: speculators stay away.

Developers say a sixth round of cooling measures imposed last month to rein in prices and to avoid an asset bubble are now having an impact on sales.

"If you are speculating, I would suggest that you stay away in such a volatile market because no one knows what will happen next," Li told a news conference after his company Cheung Kong [Holdings] Ltd. announced its first annual decline in net profit in five years.

"Look at your pocket first and don't take risks," Li said.

In late February, Financial Secretary John Tsang imposed a new round of steps to curb prices that have doubled since 2008, saying they were needed to keep the potential economic risk from spreading in the financial hub.

The new measures included higher stamp duties and home loan curbs on property transactions.
 
In the first three weeks of March, second-home transactions plunged to their lowest since the outbreak of Severe Acute Respiratory Syndrome (SARS) in 2003, when Hong Kong's real estate market hit an all-time low, according to data from property agent Midland Realty.
 
"We only recorded two deals from the 10 large-scale residential estates during the past two weeks," said Wong Leung Sing, an analyst at Centaline Property Agency, who described the market as the worst he's ever seen.
 
"The market might head in two different directions: Prices stay the same with a plunge in transactions, or prices will just collapse," Wong added, explaining that home prices may drop as much as 20 percent in the second quarter.
 
Sun Hung Kai Properties Ltd., the world's No.2 property company by market value, has also cautioned about the impact of the tightening measures and lowered its sales target for this financial year by 9 percent.
 
Analysts say Cheung Kong has been forced to cut prices to boost sales in a lethargic market.
 
Cheung Kong, Hong Kong's second-largest property developer after Sun Hung Kai Properties, cut the price of a new project in the city by 6 to 17 percent, according to Macquarie Equities Research.
 
Cheung Kong on Tuesday logged a 30 percent fall in 2012 net profit from a year earlier, although the total net profit of HK$32.2 billion ($4.1 billion) beat analysts' expectations.
 
Over the past three years, property prices have surged in Hong Kong, one of the world's most expensive property markets, on ultra-low interest rates, tight supply and abundant liquidity.
 
Correction on the cards

Along with government tightening, a number of banks raised mortgage rates by 25 basis points earlier this month.
 
"We think the rate hike has psychological impact more than actual impact to buyers," Dennis Wu, research analyst at Phillip Securities, wrote in a note last week.
 
Wu said a big drop in property prices in the past was only triggered by major events, such as the financial crisis in 1997 and the SARS outbreak in 2003.
 
"But in view of property prices at historically high levels, government damping non-user demand and some property developers offering a price discount, we maintain a 5 to 10 percent reasonable correction forecast for 2013 property prices."
 
Despite signs of slowdown, the Centa-City Leading Index, a widely used indicator of the city's residential price trends, is now at a record 123.7. That's 1.7 percent higher than mid-February.
 
Property developers in the Chinese special administrative region have so far seen limited impact from ongoing government tightening.
 
On Monday, Henderson Land Development Co Ltd. recorded a 28 percent year-on-year rise for 2012 underlying profit, while Agile Property Holdings Ltd.'s net profit rose 22 percent during the same period.
 
Henderson said in statement the cooling measures had resulted in a moderate downtrend in property prices and a drastic drop in property transactions.

You May Like

Hong Kong Democracy Calls Spread to Macau

Macau and Hong Kong are China’s two 'special administrative regions' which gives them a measure of autonomy More

After Nearly 2 Years, Pistorius Remains Elusive

Reporter Anita Powell reflects on her experience covering the Olympic athlete's murder trial More

Kenyan Coastal Town Struggles With Deadly June Attacks

Three months after al-Shabab militants allegedly attacked their town, some Mpeketoni residents are still bitter, question who was really behind the assaults More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Obama to Ramp Up Anti-Ebola Efforts in Africai
X
Luis Ramirez
September 15, 2014 11:01 PM
President Barack Obama on Tuesday will unveil his plan to ramp up efforts against the spread of the Ebola virus in Africa. VOA White House Correspondent Luis Ramirez reports.
Video

Video Obama to Ramp Up Anti-Ebola Efforts in Africa

President Barack Obama on Tuesday will unveil his plan to ramp up efforts against the spread of the Ebola virus in Africa. VOA White House Correspondent Luis Ramirez reports.
Video

Video West Trades Accusations Over Ransoms

As world leaders try to forge a common response to the threat posed by Islamic State militants in Iraq and Syria, there is simmering tension over differing policies on paying ransoms. In the past month, the jihadist group has beheaded two Americans and one Briton. Both countries refuse to pay ransom money. As Henry Ridgwell reports for VOA from London, there is uncertainty in the approach of some other European nations.
Video

Video Scotland Independence Bid Stokes Global Interest

The people of Scotland are preparing to vote on whether to become independent and break away from the rest of Britain, in a referendum being watched carefully in many other countries. Some see it as a risky experiment; while others hope a successful vote for independence might energize their own separatist demands. Foreign immigrants to Scotland have a front row seat for the vote. VOA’s Henry Ridgwell spoke to some of them in Edinburgh.
Video

Video Washington DC Mural Artists Help Beautify City

Like many cities, Washington has a graffiti problem. Buildings and homes, especially in low-income neighborhoods, are often targets of illegal artwork. But as we hear from VOA’s Julie Taboh, officials in the nation's capital have come up with an innovative program that uses the talents of local artists to beautify the city.
Video

Video US Muslim Leaders Condemn Islamic State

Leaders of America's Muslim community are condemning the violent extremism of the Islamic State group in Iraq and Syria. The U.S. Muslim leaders say militants are exploiting their faith in a failed effort to justify violent extremism. VOA correspondent Meredith Buel reports.
Video

Video Americans' Reaction Mixed on Obama Strategy for Islamic State Militants

President Barack Obama’s televised speech on how the United States plans to “degrade and destroy” the group known as the Islamic State reached a prime-time audience of millions. And it came as Americans appear more willing to embrace a bolder, tougher approach to foreign policy. VOA producer Katherine Gypson and reporter Jeff Seldin have this report from Washington.
Video

Video Authorities Allege LA Fashion Industry-Cartel Ties

U.S. officials say they have broken up crime rings that funneled tens of millions of dollars from Mexican drug cartels through fashion businesses in Los Angeles. Mike O'Sullivan reports that authorities announced nine arrests, as 1,000 law enforcement agents fanned out through the city on Wednesday.
Video

Video Bedouin Woman Runs Successful Business in Palestinian City

A Bedouin woman is breaking social taboos by running a successful vacation resort in the Palestinian town of Jericho. Bedouins are a sub-group of Arabs known for their semi-nomadic lifestyle. Zlatica Hoke says the resort in the West Bank's Jordan Valley is a model of success for women in the region.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid