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Property News Weekly Digest
〈Asian Post, Aug 23, 2021〉Car parks on move despite price gains

Hong Kong's economy has been on a recovery path since the pandemic gradually stabilized at the beginning of this year and that has driven the prices of car parking spaces up by between 1 and 18 percent at 15 housing estates in the first seven months.

Compared to property prices, parking spaces have relatively low entry barriers, making them targets for car owners and investors, people in the industry say.

The biggest price increase for parking spaces among all 15 housing estates this year was in La Cite Noble in Tseung Kwan O.

A space there sold last month for HK$1.8 million, its price up 18 percent from the beginning of the year.

Ken Lau, area director at Hong Kong Property, said the property market has performed well this year, especially in Tseung Kwan O, where multiple new high prices were recorded, making some investors more cautious about taking the plunge.

In contrast, prices for parking spaces in the same area still lagged behind.

Take La Cite Noble as an example. Despite gains, there was still room for prices of parking spaces to rise compared to all-time highs in 2018, which spurred investors into taking the plunge, further driving up prices, he added.

〈Asian Post, Aug 22, 2021〉Rents in Hong Kong are poised to increase further as soaring house prices deter would-be buyers and push them into the rental sector, according to property analysts.

A price index of second-hand homes compiled by Centaline Property Agency soared to a record of 191.34 in the first week of August, surpassing the previous high in June 2019, just before Hong Kong's street protests began to hurt the city's economy.

As a result, some prospective buyers are electing to rent while they wait in the hope that the market will eventually cool down.

"People may [suddenly realise] they are not able to afford to enter the market, so their only option is to rent," said Derek Chan, head of research at Ricacorp Properties.

Rents are likely to be boosted further by an increase in mainlandstudents looking for accommodation when university lectures resume next month, he said.

Home rents will increase 15 per cent in the whole of this year as the economy rebounds from Covid-19 and amid the expected influx of students, according to Centaline.

The city's rental index rose for four consecutive months to June, according to the latest data from the Rating and Valuation Department. Analysts' predictions for rent increases this year have ranged from 5 per cent to 15 per cent.

〈Taiwan News, Aug 21, 2021〉Chinese President Xi Jinping is fleshing out his plans for wealth redistribution. He wants to restrain "unreasonable income", hike wages and expand the middle class, per a readout of a top-level conference on Tuesday, which helps explain his recent rough treatment of corporate tycoons. Funding fiscal transfers and social services could entail fresh burdens for China Inc, and the long-delayed property tax may be implemented at last.

The wealthiest 1% of Chinese people now hold 31% of the country’s wealth, up from 21% two decades ago, per a Credit Suisse report. The pandemic, which hit small businesses and poor workers hardest, has exacerbated the gap, yet the number of newly-minted ultra-rich surged 50% compared to 2019 as financial markets popped.

It is easy for Xi to make rich people less rich; investors wiped up to $1 trillion off the value of listed Chinese companies since February as officials and state media went after e-commerce giants, video-game companies, after-school tutors and property developers.

But increasing disposable incomes for ordinary people, which only grew 1% for urban residents in 2020, will be trickier in a system better at driving growth through investment than consumption. It will require fresh fiscal transfers and increased social spending, and companies and wealthy people will probably be on the hook to help pay. For example, while executives ranging from Tencent's (0700.HK) Pony Ma to Meituan's (3690.HK) Wang Xing have already stepped up their charity efforts, that probably won’t stop Beijing from bringing tax rates for internet companies, long held at a preferential rate of 10%, back up to the 25% corporate standard.

〈The Standard, Aug 20, 2021〉China Evergrande (3333) chairman Hui Ka-yan will step down as chairman of flagship unit Hengda Real Estate Group, a posting on the National Enterprise Credit Information Publicity System showed yesterday.

Zhao Changlong, previously a company director, will replace Hui as chairman, and will also be general manager. Zhao is also a deputy chairman and general manager at another unit, Evergrande Property Services (6666).

Shares in Evergrande companies slumped on the news. China Evergrande slipped around 4 percent to HK$5.29, Evergrande Property Services fell 8.68 percent to HK$6.42 and China Evergrande New Energy Vehicle plunged 5.11 percent to HK$12.62 yesterday.

Evergrande said the change was "normal" and due to the termination of a plan to gain a listing for Hengda on China's A-share market by buying an already listed company, and it did not involve any change in management or shareholding structures.

Investors have been concerned about Evergrande's financial health and the potential systemic financial risk it poses, and there is increasing speculation that it may head to a restructuring

〈China Daily, Aug 19, 2021〉migration and better medical, education and eldercare conditions, first- and second-tier cities in China have experienced the sharpest increases in housing prices.

Shanghai, for example, has a more balanced industrial structure with services accounting for over 70 percent of its GDP, and its advantages in terms of education, medical services, safety and public utilities were clearly evident during the pandemic. As a result, the city's housing market attracts not only local buyers but also those from across the country, and this has been driving prices higher.

Shanghai has a population of 25 million and a land area of 6,340 square kilometers. By comparison, Beijing has an area of 16,000 sq km and a population of less than 22 million. The high housing prices in Beijing are not a result of land shortage — rather, they are a result of land-related policy stipulations.