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Property News Weekly Digest
2019/8/17
〈Asian Post , August 17, 2019〉Hong Kong’s corporate elite have come off the sidelines to oppose the violent protests that have disrupted businesses in the city and slashed billions of dollars off their market value.

In full- and half-page newspaper advertisements Wednesday and Thursday, conglomerates including those founded by 91-year-old Li Ka-shing, the city’s richest person, and Henry Cheng, who runs a property-to-jewelry empire, called for restoring order and rule of law. Some supported the city’s Beijing-backed authorities in their efforts to quell the unrest.

What started as protests over an extradition bill more than two months ago have widened into ongoing demonstrations against Beijing’s tightening grip on the semi-autonomous Chinese city. At least seven companies, all of them among the 10 worst performers on the benchmark Hang Seng Index over the past month, placed the ads after the unrest crippled Asia’s financial hub.

“Save the economy, safeguard livelihood,” said the advertisement by Cheng’s New World Development Co., which has been tapped to build a HKD20 billion shopping-and-entertainment complex at Hong Kong’s international airport. Li’s CK Group ad urged readers to: “Rebuild a harmonious society.” The notice by Henderson Land Development Co., one of the city’s largest developers, asked: “Would a collapsed Hong Kong benefit you or your family?”Since July 19, at least $29 billion in market value has been wiped off the five flagship companies belonging to the CK group, Sun Hung Kai Properties Ltd., Henderson and New World, which runs Chow Tai Fook Jewellery Group Ltd. Tycoons with companies trading in Hong Kong have also absorbed losses, with the 10 wealthiest seeing their combined fortunes drop by about $28 billion since the unrest began, according to the Bloomberg Billionaires index.

Hui Ka Yan, founder of property developer China Evergrande Group, has seen his net worth dip $4.5 billion to $29.6 billion. The wealth of CK’s Li has declined by $3.9 billion to $30.6 billion, the index shows.

〈Ejinsight, August 16, 2019〉The social unrest in Hong Kong, which began more than two months ago in the wake of a government bid to amend the extradition law, is beginning to cast a shadow on the city's housing market.Historical experience over the last four decades showed that political turmoil usually won’t inflict a sustained and huge shock to home prices, unless it triggers long-lasting fallout such as a migration wave.

It remains unclear if the current unrest would develop into long-term conflicts and prompt a large number of Hongkongers to leave and move their wealth elsewhere, like what we have seen in the 80s.A slowing economy is also set to put pressure on property prices.Amid the US-China trade war, Hong Kong’s GDP growth has already eased to 0.6 percent in the second quarter, the lowest level in a decade.

That’s compared to 4.6 percent growth in first quarter last year, when trade war was yet to break out.Tourist arrivals to Hong Kong, in particular from the biggest source -- mainland China, are set to decline following the recent string of protests.The retail industry could be at risk, eventually hurting local consumption and the overall economy.Housing prices are closely tied to economic growth.

Historical data shows home prices usually posted steep declines before and during sharp economic contraction.Despite occasional divergence, housing prices typically move in tandem with the stock market. Given this, the recent weakness of the equity market does not bode well for property prices.Still, the city’s secondary housing price index has yet to show any notable decline.But some indicators, such as market breadth, are flagging a consolidation.The proportion of the city's 128 housing estates with current average home price above the 10-week average has begun to retreat from nearly 90 percent in middle of May.

〈Asian Post, August 15, 2019〉Some property sellers in Yuen Long and North Point, two districts that have seen some of the most violent clashes during the street protests, are cutting their asking prices amid growing concerns over the outlook for the economy.

A 300 sq ft flat at Twin Regency in Yuen Long recently sold for HK$4.48 million, about 10 per cent below the market price, leaving its owner with a HK$300,000 loss after stamp duty and other expenses, Midland Realty senior sales manager Kevin Cheung said.

"The owner was in a hurry to offload the property because the market hasn't been good," Cheung said.

"Other owners are worried, [too], as prices have softened by about 10 per cent."
In North Point meanwhile, where suspected triad members clashed with protesters on August 5, a 286 sq ft flat at the Victoria Harbour project is on offer at HK$10.8 million, little changed from its purchase price a year ago.

At that price, the owner would be out of pocket by about HK$1.44 million after stamp duty and other expenses, agents said.

Prices might dip 3 per cent at housing estates across Hong Kong in August, agents said, as the protests combine with a slowing mainland economy, the impact of the US-China trade war and a sluggish stock market to dampen buyer sentiment.

"The social movement has not showed any signs of lessening in August, and instead is intensifying, which adds to concerns about the impact of the trade war on the economy," said Ricacorp Properties' chief executive Willy Liu. "Clouded by negative sentiments, sellers are forced to give larger discounts to attract buyers."

〈Taipei Times, August 14, 2019〉CK Asset Holdings Ltd , the developer founded by billionaire Li Ka-shing , postponed a planned sale of condominiums in Hong Kong as political protests made it difficult to market the luxury residences.

The homes at 21 Borrett Road would not be offered for sale as scheduled this month, a spokeswoman for the company said yesterday, confirming an earlier report on RTHK radio.

Marketing a luxury project would be difficult under the social atmosphere and there is no fixed schedule for the sale, CK Asset executive director Justin Chiu (趙國雄) told the station.

The apartments would cost at least HK$100 million (US$12.75 million) each, Chiu told RTHK.

That means CK Asset could generate HK$11.5 billion just for the 115 units in the project’s first phase, scheduled to be completed next month. There are 66 units in the second phase.

CK Asset’s decision adds to signs of economic stress in the territory more than two months after protests started against a proposed extradition bill.

Sun Hung Kai Properties Ltd has said that it would delay the sale of its residential project in Kowloon District as consumer sentiment was worsening on the social unrest, the South China Morning Post reported this week.

Images of riot police clashing with protesters at Hong Kong International Airport further dented the territory’s reputation as a stable place to do business during the 11th week of protests.

The escalating stakes have raised fears that China would mobilize forces to restore order, a move that could scare away foreign companies and further erode the financial hub’s autonomy.

The Real Estate Developers Association of Hong Kong on Thursday last week in a statement condemned the violence and called for peace.

〈China Daily, August 13, 2019〉CK Asset Holdings, the second-largest developer by market value in Hong Kong, has become the latest to defer the sale of a luxury residential project, as 10 weeks of social turmoil have hurt consumer sentiment.

The as-yet-unnamed project at 21 Borrett Road in Mid-Levels was originally expected to be released for sale this month.

Executive director Justin Chiu Kwok-hung said yesterday CK Asset had decided to postpone the sale of the luxury flats, which would cost more than HK$100 million each.

"We will have difficulties selling these luxury flats right now," Chiu said.

The Hong Kong economy, which shrank in the second quarter compared to the first, has been in a downbeat mood this year, squeezed by the US-China trade war. Sentiment has deteriorated further after protests against the now-suspended extradition bill started on June 9.

Chiu said there was a growing risk of an economic downturn in the second half as he did not expect the trade war to be easily resolved and saw the protests hurting consumer spending.

The first phase of the sale would have seen the release of 115 flats out of a total of about 180, with an estimated value of HK$14 billion, according to agents.

Chiu, however, said CK Asset would release other mass residential projects for sale as soon as possible "even if the market accepts a price lower than our expectation".