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Property News Weekly Digest
〈Taipei Times, Oct 24, 2020〉HK property market takes hit from Cathay job cuts

Calls from laid-off Cathay Pacific Airways Ltd pilots began arriving at OKAY Property Agency Ltd not long after the Hong Kong airline announced one of the biggest job cuts in global aviation.

The cull that affected more than 5,000 Cathay employees on Wednesday has forced some to find cheaper housing or leave Hong Kong altogether. It is a painful blow for one of the territory’s biggest workforces, and yet another hit for a property market under pressure from political turmoil and a COVID-19 pandemic-induced recession.

Vacancies for apartments priced at HK$65,000 (US$8,396) a month or more had already been rising in Discovery Bay, a neighborhood about 30 minutes from the airport that is home to many pilots, said Nina Schulte-Mattler, a senior manager in the residential division of OKAY Property.

In Tung Chung, another area popular among Cathay employees, about 60 renters have surrendered their leases over the past three months, said Joe Lee , a senior area sales manager at Midland Realty Ltd .

"I’ve never seen so many people giving up their rented apartments in my career," Lee said. "Local crew members who were let go or had their salaries cut are terminating their leases."

Rental prices in Tung Chung have slid 5 percent since the start of the year and might fall another 3 percent next quarter, Lee said.

The majority of rental demand in the neighborhood comes from airline crew members, employees with logistics companies, and other professionals related to aviation.

〈The Standard, Oct 23, 2020〉CK Asset (1113) has released the first price list of El Futuro in Sha Tin, involving 54 units at an average price of HK$17,730 per square foot after discount.

The first batch offers two-bedroom to four-bedroom units ranging from 484 sq ft to 1,226 sq ft . The minimum price per sq ft is HK$15,599 for a two-bedroom unit.

Meanwhile, Hong Kong Ferry (0050) and Empire Group have released the first price list of the second batch of flats at Starfront Royale in Tuen Mun, offering 123 units at an average price of HK$14,585 per sq ft after discount.

The average price per sq ft is 1 percent more expensive than the first batch.

The second batch offers studio flats to four-bedroom flats ranging from 208 sq ft to 996 sq ft.

〈Asian Post, Oct 22, 2020〉All three tenders for a commercial site in Tung Chung have been rejected as their premiums did not meet the government's reserve price, the second commercial plot withdrawn from government tender in five months.

And rents of a grade A office building in Kai Tak start from HK$40 per sq ft only.

The three tenderers are CK Asset (1113), Sino Land (0083) and Kerry Properties (0683), and Sun Hung Kai Properties (0016).

The plot has an area of 132,772 sq ft and a floor area of 1.26 million sq ft.

Five months ago the government rejected all four tenders received for the purchase of a non-industrial site in Kai Tak.

Also in the district, the asking rent of Airside, a mixed-use commercial development developed by Nan Fung Group, starts from HK$40 per sq ft, about 10 percent lower than the original rent.

The project comprises of a 47-storey mixed-used development building, including a more than 30-storey Grade A office and a multi-storey retail complex with an interconnected underground shopping street.

The total investment in the project will reach HK$32 billion. The development is set to open in the fourth quarter in 2022.

〈Asian Post, Oct 21, 2020〉Some owners of luxury houses and units with cash-flow problems are using their properties as collateral to obtain multiple loans amid the pandemic.

On The Peak, a 2,363-sq-ft luxury house at Severn 8 changed hands for HK$175 million, or HK$74,058 per square feet, after HK$450 million was slashed from the initial asking price. The original owner purchased the house for HK$100.8 million in 2007.

Since last year, the original owner had taken three loans from finance companies by pledging the house.

Meanwhile, at least four foreclosed units used to back multiple loans are now available for sale at Dragons Range in Kau To Shan, sources say.

A 932-sq-ft flat at the project is available for sale at HK$13.8 million, or HK$14,807 per sq ft. The asking price is 7 percent less than what the owner paid, which was HK$14.86 million five years ago, according to the Land Registry.

The owner had obtained loans from four banks and finance companies by putting the flat up as collateral.

〈China Daily, Oct 20, 2020〉The government has announced that it is considering halting the legislation for a first-hand property vacancy tax "in response to the latest economic situation". The move will of course delight property developers, but whether it is appropriate to bring such a premature end to the legislation is worth discussion.

Although it is indisputable that the economy has been battered by the pandemic, the price of property has not seen a significant downward revision. Property prices in the city have fallen by only about 5% from the historical highs. The pandemic has brought global interest rates to a low level.

Hong Kong has a strong demand for housing but the supply has remained persistently tight. According to the government's figures, the number of unoccupied first-hand private units has kept increasing over the past two years. They include not only luxury properties, but also ordinary flats that target the middle-class market. For developers who hold an optimistic view about the outlook of the property market after the pandemic, it is possible that their "reluctance to sell" may aggravate. The goal of the vacancy tax was to tackle hoarding and increase housing supply. This goal should not be changed.

The major cause of Hong Kong's sky-high property prices is the shortage of land and housing. Looking at the tendency of property prices to "climb forever", some property developers have become unwilling to sell too many units at one time even after the completion of new-builds. In early 2018, government officials suggested introducing the vacancy tax in a bid to release these unsold flats into the market and increase housing supply.