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

EU Court Fines Poland for Hosting CIA 'Black Sites'

Ruling is first time a court has acknowledged suspects were held and tortured at the sites, under US program launched following the 9/11 terrorist attacks More

Migrant Issues Close to Home Spur Groups to Take Action

Groups placing water, food in the desert, or aiding detainees after release, have one common goal: no more deaths of migrants crossing illegally into the US More

Video At AIDS Conference, Prevention Pill Stirs Excitement

Truveda shows promise, spurring debate over access and other approaches 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.
Israel Targets Gaza Supply Tunnelsi
X
July 24, 2014 4:42 AM
The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video Israel Targets Gaza Supply Tunnels

The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video MH17's 'Black Boxes' Could Reveal Crash Details

The government of Malaysia now has custody of the cockpit voice and flight data recorders from Malaysia Airlines Flight 17, which was hit by a missile over Ukraine before crashing last week. As VOA's Carolyn Presutti reports, the so-called black boxes may hold information about the final minutes of the flight.
Video

Video Living in the Shadows Panel Discussion

Following a screening of the new VOA documentary, "AIDS - Living in the Shadows," at the World AIDS conference in Melbourne, a panel discussed the film and how to combat the stigma associated with HIV/AIDS.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video Relic of Saint Draws Catholics Worried About Immigration Issue

A Roman Catholic saint who is a figure of devotion for those crossing the border into the United States is attracting believers concerned about the plight of undocumented immigrants. Mike O'Sullivan reports from Los Angeles, where a relic of Saint Toribio has drawn thousands to local churches.
Video

Video US Awards Medal of Honor for Heroics in Bloodiest of Afghan Battles

U.S. combat troops are withdrawing from Afghanistan, on pace to leave the country by the end of this year. But on Monday, U.S. President Barack Obama took time to honor a soldier whose actions while under fire in Afghanistan earned him the Medal of Honor. VOA's Jeff Seldin has more from the Pentagon.
Video

Video Ukraine Rebels Surrender MH17 Black Boxes

After days of negotiations, a senior separatist leader handed over two black boxes from an airliner downed over eastern Ukraine to Malaysian experts early Tuesday. While on Monday, the U.N. Security Council unanimously demanded that armed groups controlling the crash site allow safe and unrestricted access to the wreckage.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.

AppleAndroid