〈Asian Post, May 27, 2017〉Mainland developers are increasingly turning their attention to Hong Kong as Beijing continues to roll out unprecedented policies to regulate home purchases which they say could last a while.
Since October last year, 55 mainland cities have together imposed about 160 new policies to check frenetic buying and soaring home prices.
Lin Feng, the chief executive of Cifi Holdings (Group), told a conference of mainland developers in Hong Kong the latest round of tightening was strikingly tougher than in previous years and he expected any relaxation in policies would come in the middle of next year at the earliest.
The [Chinese] government is now looking to do away with what has become one of the fundamental reasons to buy a home, which is as an investment. It is stressing that homes are for accommodation [as opposed to] investments Lin Feng, chief executive officer, CIFI Group"The objectives this time are different.
In the past, they were only to tweak the market," he said. "But the government is now looking to do away with what has become one of the fundamental reasons for buying a home, which is as an investment. It is stressing that homes are for accommodation, and not investments."
Ding Zuyu, the chief executive of E-House Holdings, said while stockpiles and prices were still rising in third and fourth-tier cities, first and second-tier cities were seeing declining stockpiles and stagnant prices.
He said the challenging environment in the mainland was likely to drive more developers to set up shop in Hong Kong, where land costs were much lesser than development costs.
"In first-tier cities (Beijing, Shanghai, Shenzhen and Guanzhou), land cost can easily account for 70 per cent of the total cost of a project, compared with less than 50 per cent in Hong Kong," he said. "Without mainland developers competing, that figure could be well below 40 per cent."
Ding said that as competition in the Hong Kong market intensified, the cost of land would eventually account for more than 60 per cent of total costs in future.
〈Asian Post, May 27, 2017〉Thousands of prospective buyers turned out yesterday for a residential project in Tsuen Wan developed by Cheung Kong Property Holdings, shrugging off tighter mortgagelending rules imposed in a bid to cool the city's red-hot property market.
Long queues began forming at the Fortune Metropolis mall in Hung Hom before the sale of the Ocean Pride development started at 9am yesterday. CK Property is controlled by Hong Kong's richest man, Li Ka-shing.
Last night, CK Property said all 496 units released in the first round of sales had been subscribed. The units were put on the market at an average discounted price of HK$15,772 per square foot and about 28 bidders vied for each unit. That meant about 13,888 people drew lots to buy the units.
Earlier in the day, both levels of Fortune Metropolis were packed, flooding the mall with zealous buyers. Half a dozen real estate agencies also staked their turfs in various parts of the mall to woo buyers.
As CK Property continued to pick and broadcast the ticket numbers for purchase, anxious buyers had their eyes glued to the numerous television monitors installed at almost every corner of the mall. The drawing process proceeded in an orderly fashion.
The developer gave priority for group A, which involved potential buyers seeking to purchase more than two units.
"There is one family that snagged six units in total, which marks the highest number of units bought by one family," said Justin Chiu Kwok-hung, executive director of CK Property.
Chiu said the largest transaction involved HK$70 million, while 90 per cent of the buyers were locals.
"About 65 per cent of potential buyers are below the age of 30. They came with their parents to select flats. Some are young couples who brought their kids as well," Chiu said.
"The big turnout rate is reminiscent of the previous market peak in 1997, but I do not see any bubble risk. In 1997, the mortgage rate was 10 per cent. Today, most buyers are end users and the mortgage rate is low," he said.
At present, the effective mortgage rate is 2.2 per cent. All 148 units allocated for group A had been reserved by buyers by about 2pm. The big turnout rate is reminiscent of the previous market peak in 1997, but I do not see any bubble risk Justin Chiu, CK Property Maggie Due, a potential buyers, said she and her family, received their tickets at about 12 noon after standing in the queue for more than two hours.
"Our family is not too concerned about the tighter mortgage rules," she said. Last Friday, the Hong Kong Monetary Authority (HKMA) ordered commercial banks to allocate a larger risk weighting towards their assessment of credit worthiness of mortgage borrowers. The HKMA also cut the amount of allowable loans on residential and commercial properties.
〈The Standard, May 26, 2017〉Kam Sheung Road land sale in city gets response from just one mainland developer as tighter controls prompt firms to adopt a cautious stance
Mainland developers continue to shy away from Hong Kong's land market with just one mainland backed company known to have submitted a bid for a residential site in Yuen Long.
MTR Corp said eight developers had submitted bids for the parcel of land at Kam Sheung Road Station on the West Rail line before the tender closed at 2pm yesterday.
Only one mainland company, China Resources Land, submitted a bid. The seven other bidders were based in Hong Kong, including Cheung Kong Property Holdings, Sun Hung Kai Properties, Henderson Land Development, Wheelock Properties, New World Development and Sino Land.
MTR Corp, acting as the agent for West Rail, postponed the tender deadline by one day to 2pm yesterday due to a Black Rainstorm warning issued on Wednesday.
The site, which could potentially provide a total floor area of 1.24 million sq ft, is estimated to be worth HK$6.2 billion, or HK$5,000 per sq ft.
The lot will provide 1,652 flats, of which 40 per cent, or 661 units, will be smaller than 538 sq ft. The project is slated for completion in 2025.
"We do not see many mainland players participating as they prefer sites in urban areas," said Thomas Lam, head of valuation at Knight Frank.
There was a similar response to the Urban Renewal Authority's redevelopment project at Tai Kok Tsai, which closed for tender yesterday, with the 14 developers submitting bids being dominated by Hong Kong firms, according to property consultants.
Mainland companies, which had been setting one price record after another as they snapped up Hong Kong residential properties over the past year, did not show keen interest in the bidding for Murray Road, a grade A commercial land site in downtown Central. That tender closed on May 12.
〈The Standard, May 25, 2017〉Mainland developers, especially small- and medium-size players, will see increased business risks and pressures in their capitalization this year, according to a report released by the China Real Estate Association and China Real Estate Research Association.
The report evaluated the overall performance last year of mainland developers according to 42 factors, including their profitability and operating scale.
China Vanke, China Overseas Land & Investments (0688) and Evergrande (3333) were the top three developers according to the 42 factors.
Last year, total assets of mainland developers increased 22.4 percent to 71.75 billion yuan (HK$81.4 billion) from a year earlier. Their revenue expanded 25.04 percent to 14.72 billion yuan year-on-year, while net earnings stood at 1.88 billion yuan, up 17.58 percent.
The Chinese government adopted several policies to cool down the property market, the report noted.
Oscar Choi, who heads Asia-Pacific property at Citi Research, said he expects a tightening by Beijing of policies in the housing market in the next year or two, not a loosening.
He described as "unscientific" and unsuitable to the market the central government's policies in the housing sector.
Meanwhile, China Real Estate Research Association executive director Ding Zuyu said mainland developers are likely to invest further in Hong Kong's real estate market as land costs in the SAR comprise only a small proportion of total costs.
〈The Standard, May 25, 2017〉Hong Kong investors yesterday brushed off a ratings downgrade by Moody's as the benchmark Hang Seng Index extended a five-day rally to the highest levels in nearly two years.
Hong Kong saw its debt rating cut by Moody's yesterday - hours after China's downgrade - highlighting potential risks from a tightening economic integration.
But Financial Secretary Paul Chan Mo-po said Hong Kong does not agree with the decision to "mechanically" downgrade the city.
In a statement on the government's website, he said Moody's has overlooked Hong Kong's "sound economic fundamentals, robust financial regulatory regime, resilient banking sector and strong fiscal position."
Moody's said the city has seen not only its property and stock markets increasingly entwined with China, but its government as well. Moody's cut the rating on local- and foreign-currency issuances to Aa2 from Aa1, but changed the outlook to stable from negative.
That's Hong Kong's first cut in ranking by Moody's since the throes of the Asian financial crisis in 1998. China's debt was lowered to A1 from Aa3 on Wednesday on concern the government won't be sufficiently able to rein in a credit boom.
"Credit trends in China will continue to have a significant impact on Hong Kong's credit profile due to close and tightening economic, financial and political linkages with the mainland," Moody's said. Closer financial ties "risk introducing more direct contagion channels between China's and Hong Kong's financial markets."