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

    Top US General: Turkish Media Report ‘Absurd'

    General Dunford rejects ‘irresponsible' claims of coup involvement by former four-star Army General Campbell, who led NATO forces in Afghanistan before retiring earlier this year

    Video Saving Ethiopian Children Thought to Be Cursed

    'Omo Child' looks at efforts of one African man to stop killings of ‘mingi’ children

    Protests Over Western Troops Threaten Libyan 'Unity' Government

    Fears mount that Islamist foes of ‘unity' government plan to declare a revolutionaries' council in Tripoli

    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.
    London’s Financial Crown at Risk as Rivals Eye Brexit Opportunitiesi
    X
    VOA News
    July 25, 2016 5:09 PM
    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video Recycling Lifeline for Lebanon’s Last Glassblowers

    In a small Lebanese coastal town, one family is preserving a craft that stretches back millennia. The art of glass blowing was developed by Phoenicians in the region, and the Khalifehs say they are the only ones keeping the skill alive in Lebanon. But despite teaming up with an eco-entrepreneur and receiving an unexpected boost from the country’s recent trash crisis the future remains uncertain. John Owens reports from Sarafand.
    Video

    Video Migrants Continue to Risk Lives Crossing US Border from Mexico

    In his speech Thursday before the Republican National Convention, the party’s presidential candidate, Donald Trump, reiterated his proposal to build a wall along the U.S.-Mexico border if elected. Polls show a large percentage of Americans support better control of the nation's southwestern border, but as VOA’s Greg Flakus reports from the border town of Nogales in the Mexican state of Sonora, the situation faced by people trying to cross the border is already daunting.
    Video

    Video In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movement

    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video Calm the Waters: US Doubles Down Diplomatic Efforts in ASEAN Meetings

    The United States is redoubling diplomatic efforts and looking to upcoming regional meetings to calm the waters after an international tribunal invalidated the legal basis of Beijing's extensive claims in the South China Sea. VOA State Department correspondent Nike Ching has the story.
    Video

    Video Four Brother Goats Arrive in Brooklyn on a Mission

    While it's unusual to see farm animals in cities, it's become familiar for residents of Brooklyn, New York, to see a little herd of goats. Unlike gas-powered mowing equipment, goats remove invasive weeds quietly and without adding more pollution to the air. As Faiza Elmasry tells us, this is a pilot program and if it proves to be successful, the goat gardener program will be extended to other areas of New York. Faith Lapidus narrates.
    Video

    Video Scientists in Poland Race to Save Honeybees

    Honeybees are in danger worldwide. Causes of what's known as colony collapse disorder range from pesticides and loss of habitat to infections. But scientists in Poland say they are on track to finding a cure for one of the diseases. VOA’s George Putic reports.
    Video

    Video Wall Already Runs Along Parts of US-Mexico Border

    The Republican Party’s presidential nominee, Donald Trump, gained the support of many voters by saying he would build a wall to keep undocumented immigrants and drugs from coming across the border from Mexico. Critics have called his idea impractical and offensive to Mexico, while supporters say such a bold approach is needed to control the border. VOA’s Greg Flakus has more from the border town of Nogales, Arizona.
    Video

    Video New HIV Tests Emphasize Rapid Results

    As the global fight against AIDS intensifies, activists have placed increasing importance on getting people to know their HIV status. Some companies are developing new HIV testing methods designed to be quick, easy and accurate. Thuso Khumalo looks at the latest methods, presented at the International AIDS conference in Durban, South Africa.
    Video

    Video African Youth with HIV Urge More Support

    HIV, the virus that causes AIDS, is the top killer of teens in sub-Saharan Africa. But many youths say their experience with the virus is unique and needs to be addressed differently than the adult epidemic. VOA South African Correspondent Anita Powell reports.
    Video

    Video Pop-Up Art Comes to Your Living Room, Backyard and Elsewhere

    Around the world, independent artists and musicians wrestle with a common problem: where to exhibit or perform? Traditional spaces such as museums and galleries are reserved for bigger names, and renting a space is not feasible for many. Enter ArtsUp, which connects artists with venue owners. Whether it’s a living room, restaurant, office or even a boat, pop-up events are bringing music and art to unexpected places. Tina Trinh has more.
    Video

    Video Scotland’s Booming Whisky Industry Fears Brexit Hangover

    After Britain’s vote to leave the European Union, Scotland’s government wants to break away from the United Kingdom – fearing the nation’s exports are at risk. Among the biggest of these is whisky. Henry Ridgwell reports on a time of turmoil for those involved in the ancient art of distilling Scotland’s most famous product.

    Special Report

    Adrift The Invisible African Diaspora