〈Asian Post, January 19, 2019〉A moderate slowdown but overall a return to a healthier cycle - that, in brief, is experts' prediction for China's real estate market this year.

A moderate slowdown but overall a return to a healthier cycle - that, in brief, is experts' prediction for China's real estate market this year.

According to a research report from UBS, a Swiss financial services giant, the Chinese real estate market appears to be set for a moderate correction, having risen in 2017 and 2018.

UBS attributed its prediction to slowing contribution from the shanty redevelopment program and weak sentiment among prospective homebuyers.

'We expect a 5 percent decline in sales in third and fourth-tier cities in 2019 compared to 2018, while the first and second-tier cities will remain stable,' said John Lam, who heads UBS' research of property in the Chinese mainland and Hong Kong. 'The overall prices in third and fourth-tier cities are likely to drop by 5 percentage points.'

Last year, China sought to cool the overheated market through yearlong stringent housing regulations, including a stricter ban on home sales and tougher access to mortgages.

This, coupled with rising interest rates and a feared potential economic growth slowdown, could affect sentiment among prospective homebuyers, the UBS report said.

'In third and fourth-tier cities, demand from property developers has two aspects: the shanty town redevelopment and investment purposes,' said Lam, in explaining why he thinks this year will likely see cooling in the real estate market.

〈The Standard, January 18, 2019〉Mainland developers came under severe selling pressure in Hong Kong yesterday, with the shares of two property firms sinking about 80 per cent.

Analysts said the stocks might have taken a hit after banks sold the shares used as collateral to borrow money amid the tightening liquidity conditions on the mainland.

Jiayuan International Group, which is behind the T Plus micro-flat project in Tuen Mun, plunged 80.6 per cent to close at HK$2.52, with more than 357 million shares traded, 68 times the daily average over the past year.

The mainland-based developer has been under pressure as sales at the project have not picked up owing to the downbeat market sentiment.

The project's sales launch closed early on December 8 after only two of the 73 flats on offer were sold. Some flats measure 128 sq ft, smaller than a standard car parking space in the city, but are priced at HK$8.25 million.

Last week, the firm said contracted sales plunged 31 per cent to 2.15 billion yuan (HK$2.5 billion) in December.

In the past year, it has taken over property projects and land plots in Hong Kong, Guangdong, Guiyang, Urumqi and Cambodia, according to stock filings.

Jiayuan had US$350 million of debt maturing yesterday. The yield on the bond with an 8.125 per cent coupon surged to 116 per cent from 16 per cent at the beginning of this month as investors dumped the paper.

〈The Standard, January 17, 2019〉Nan Fung Development yesterday said it has no plans to cut prices for new batches of units at Lohas Park Phase 6 (LP6) in Tseung Kwan O. The developer had offered a 1 percent discount when the project was launched in December 2018.

It said that 1,583 flats have already been sold at LP6, with 483 units yet to be released.

After Chinese New Year, Nan Fung Development will release some homes at 8 Deep Water Bay Drive in Deep Water Bay and 11 units at Island Garden in Shau Kei Wan.

Nan Fung Development also said it has sold all 370 units at Ori in Tuen Mun and buyers have taken possession of 73 units.

Meanwhile, Sino Land's (0083) Mayfair By The Sea 8 in Pak Shek Kok first batch was oversubscribed in the first two hours of it going on sale. Associate director (sales) Victor Tin Siu-yuen said that 60 percent of the subscribers were for the two-bedroom units with 40 percent subscribing for three-bedroom units.

Wing Tai Properties (369) plans to release another batch of The Carmel in Tuen Mun with 118 units next Sunday. Prices range from HK$3.32 million to HK$6.00 million, and the average price is HK$11,517 per sq ft.

In the Home Ownership Scheme secondary market, the number of transactions declined 27.5 percent month-on-month to 37 in the first half of January, according to Hong Kong Housing Authority.

In the second-hand market, a total of seven transactions were recorded yesterday according to Centaline Properties, Ricacorp Properties and Hong Kong Property Agency.


〈Asian Post, January 16, 2019〉Renters will be able to find bargains in Tsuen Wan, Tseung Kwan O and Kai Tak as a few thousand flats will soon be available for leasing, further adding downward pressure on prices, agents said.

In Kai Tak, some 2,400 flats will be ready for occupants in the first half, with 424 listings available already, according to Centaline Property Agency. These include the 822-unit Victoria Skye, the 930-unit Vibe Centro and the 648-unit Oasis Kai Tak.

In Kai Tak, owners of the 900-unit K City began taking possession of their flats this month. The development has the highest number of listings in the area at 271 and also the lowest average asking rent per square foot at HK$43, according to Terry Ng, senior regional sales manager at Centaline.

Wilson Kong, principal regional director at real estate brokers Hong Kong Property, said rents at Kai Tak have fallen about 10 per cent since last year on expectations of higher supply, and could drop by another 5 per cent to 7 per cent in the first half.

In Tseung Kwan O, the rental market has swollen by about 200 units, said Ken Lau, assistant regional director at Hong Kong Property, after owners of the 605-unit Alto Residences, 857-unit The Papillons and 926-unit Monterey were handed their keys late last year.

Lau said the average rent per square foot at the three developments has dropped 20.9 per cent from HK$43 during pre-lease to HK$36 at the start of this year, but is unlikely to drop any further in the coming six months.

He said that a 883 sq ft flat at The Papillons was rented this month for HK$24,000 a month, or just HK$27 per square foot, the lowest for the development.

〈China Daily, January 15, 2019〉Office space in old Sheung Wan buildings remains in demand among start-ups and small businesses unable to afford rents in Central, which have been pushed beyond reach by mainland finance firms, according to a Hong Kong-based real estate fund.

Market observers forecast rents in Central, which have risen above HK$100 per square foot, to fall by up to 5 per cent this year, but that is little consolation to small businesses.

"About a quarter of our tenants have relocated from Central," said Patrick Wong Tsu-an, chief executive of Tenacity International, which bought 299 QRC, a 36-year-old office building in Sheung Wan, for HK$2.1 billion last June from local investor Francis Law Sau-fai. Law is the second son of Lo Siu-tong, founder of developer Yu Tai Hing.

Rents in Sheung Wan range from about HK$30 to HK$40 per square foot, he said.
"Our building is filled with local tenants ranging from innovative firms and design companies to finance firms," he said.

The 25-storey office tower, a four-minute walk from Sheung Wan MTR station, has a gross floor area of 94,500 sq ft. Its price tag works out to HK$22,000 per square foot.

The western part of the city has potential for development, Wong said, adding that rents in Sheung Wan were unlikely to see significant declines because of limited supply on Hong Kong Island.