〈Ejinsight, July 6, 2019〉With the government on the back foot after the extradition bill disaster, there has been a positive consequence on another highly contentious issue -- the Lantau land reclamation plan.
We had news that Legco scrutiny of the preliminary funding request for the so-called Lantau Tomorrow Vision (LTV) project has been postponed.Even if the LTV project is hurried into commencement, it would require at least three to five years just for preparations.
Also, given the macro uncertainties amid the Sino-US trade war, it is a big “if” as to whether the mainland economy can still hold up well by the time the project officially kicks off.While authorities may still try to get the project up and running, the “super infrastructure dream” could end up being abandoned later on if there is a major economic crisis, or if some big enterprises suddenly go bust.
If China suffers a sudden and severe economic slowdown, it will almost certainly lead to a housing market crash in Hong Kong.If that happens, the gigantic artificial islands built under the LTV plan, which are intended as the new real estate growth engine in Hong Kong, could become a ghost town that is unsuitable for any industry.
Another major risk factor with the LTV project is that if there is a property market crash in Hong Kong as a result of economic slowdown in the mainland, it will take a heavy toll on government revenues. We all know that authorities have become heavily dependent on land sales income over the years.What is worrying is the prospect that the government will still inject tens of billions of dollars into the LTV initiative even if its income plunges.
There is a view among authorities that the project is a one-way ticket, where withdrawal is not an option.It is not difficult to imagine the hugely negative implications of the drain on our public finances if the government pursues the reclamation project regardless of the macro headwinds.The government may be sitting on more than HK$1 trillion in fiscal reserves right now, but the financial strength may not last if authorities pour huge resources into a project that could turn into a white elephant.
〈The Standard July 5, 2019〉Commercial property consultant Colliers International found in a survey that around 41 percent of current tenants in Central district are considering relocating when their leases expire, with Kowloon East and Island East being popular options.
Colliers surveyed 363 tenants from various sectors and found that rents on Hong Kong Island has increased 14.3 percent on average over the past three years, compared to 4.7 percent and 1.4 percent on average in Kowloon and the New Territories.
Meanwhile, the Greater Bay Area Initiative should drive net office expansion demand in Hong Kong, with 20 percent of the companies planning to increase the size of local operations, said the consultant.
Savills, another real estate adviser, believes the retail leasing market is slowing in tandem with retail sales, with mall rents little changed in the second quarter, while rents for prime street shops recorded falls of 1.9 percent.
Food, pharmaceuticals and cosmetics, with 3.1 percent year-over-year growth, are outperforming other retail sectors with one percent year-on-year increase in May, said Savills.
The firm believes that the retail market will see a quiet second half with no big headline deals.Retail sales over the January to May period continued their steady decline, falling by 1.8 percent from a year ago.
Overall, rents on prime shopping streets fell by 1.2 percent quarter on quarter, with Central dropping the most at 3.8 percent over the past quarter.
〈Business Post, July 5, 2019〉The developers of a micro-flat project in Hong Kong have cut the price of units that are smaller than a car parking space by 38 per cent after managing to sell only two during an initial launch in December.
Prices were unveiled yesterday for 36 flats at the T-Plus project in Tuen Mun, jointly developed by Jiayuan International Group and Stan Group. They started at HK$1.73 million, which would be the cheapest property in the city since CK Asset Holdings sold 165 sq ft units at Mont Vert in Tai Po for HK$1.65 million in 2014.
Of the 36 flats on offer, 12 measure 128 sq ft each. The lowest price on a per square foot basis among the 12 is HK$13,577 after discounts. That price is 37.6 per cent lower on a per square foot basis than a 131 sq ft studio that the developers put on the market for HK$2.85 million in November.
Vincent Cheung, managing director of Vincorn Consulting and Appraisal, said it was "impossible to find" a flat for such a price, adding a car parking space in the city costs as much.
He said it made sense to buy a flat costing HK$1.73 million as the monthly mortgage payment of about HK$6,100 would be similar to renting a subdivided flat in Tuen Mun, which could cost between HK$6,000 and HK$7,000 a month.
Market observers said the developers had to resort to steep discounts after agents sold only two of the 27 units on offer at T-Plus on December 8, prompting them to later suspend sales.
〈The Standard, July 4, 2019〉Hong kong's old Kai Tak airport was famed for its hair-raising landings, as planes skimmed apartment rooftops before touching down just minutes from bustling Kowloon.
Now, the site is morphing into one of the city's biggest real estate developments - with multi-million dollar apartments slowly filling up even as new parcels of land go for record prices.
China Resources Land and Poly Property Group last week paid HK$12.9 billion for a plot - an unprecedented amount from mainland developers, who snapped up almost 60 percent of residential land sold by the government in the first half.
Roughly the size of New York's Central Park, and jutting into Victoria Harbour just across from Hong Kong island, Kai Tak offers a rare opportunity to develop prime real estate in the center of one of the most densely populated cities on Earth.
Hong Kong-based developer Sun Hung Kai Properties paid a record HK$25.2 billion for a single plot last year.
The site, which is next to where the Kai Tak MTR station will be, can yield a gross floor area of 1.42 million square feet.
That works out at HK$17,776 per square foot of floor space, meaning a two-bedroom unit will probably be priced at about HK$19.5 million, according to Thomas Lam, an executive director at Knight Frank.
〈The Standard, July 3, 2019〉Property sales numbers fell 40.01 percent month on month or 32.87 percent year on year to 6,211 in June, data from the Land Registry shows.
Their value amounted to HK$53.8 billion, dropping 40.4 percent and 33.4 percent respectively.
For residential units, deals declined 43.63 percent month on month, or 31.07 percent year on year to 4,627 deals, with HK$45.3 billion changing hands.
It is reported that Xia Haijun, vice president and chief executive of China Evergrande (3333) bought a duplex unit in The Pavilia Hill in Tin Hau for HK$156 million, or HK$55,000 per square foot.
Forfeitures are continuing even though developers are launching sales.
Sun Hung Kai Properties' (0016) Mount Regency I in Tuen Mun reported a deposit forfeiture of about HK$370,000. The 455-sq-ft flat recorded two foreclosures in a year, with total forfeits of HK$1.12 million.
In the secondary market, deals came in at 3,663, down 31.4 percent from May, according to Midland Realty.
Separately, a 638-sq-ft apartment in Billionaire Avant in Kowloon City changed hands for HK$11 million, which is 5.6 percent lower than its buying price in 2012 and causing its former owner to lose HK$121,000.