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Property News Weekly Digest
2021/10/23
〈Asian Post, Oct 23, 2021〉Evergrande payment calms default fears

Investor confidence 'gets a boost' after developer pays US$83.5 million interest on offshore bond just before the end of a 30-day grace period

China Evergrande Group paid the US$83.5 million interest payment on its offshore bond, just before a 30-day grace period ran out for declaring it in default, as the heavily indebted developer took action to assure a capital market on edge about the spectre of the nation's highly leveraged property sector.

The Shenzhen-based developer transferred the payment owed on its 8.25 per cent, US$2.03 billion bond maturing in March 2022 to Citibank on Thursday, according to separate reports by the state-run China Securities Times newspaper and Reuters, both citing unidentified sources.

Evergrande did not respond to a request for confirmation while Citibank, the bond's trustee, declined to comment.

The developer missed paying the coupon on September 23, and was given a 30-day grace period to comply before it would be declared in default, which could trigger cross-defaults on much of its offshore debt and, in the worst case, set the stage for bondholders to petition for the company's liquidation.

〈Asian Post, Oct 22, 2021〉The price of car parking space at the Lohas Park residential enclave in Tseung Kwan O district has risen to a record, as a chronic shortage in the area forced vehicle owners to bid up prices.

Wheelock Properties, the developer of the Malibu flats, released the final 87 parking spaces in the project at a price range of between HK$2.2 million and HK$2.46 million each, an increase of as much as 23 per cent from two years ago. Applications to bid closed yesterday.

Hong Kong has networks of subway trains, surface trams and buses that connect all but the most exclusive residential enclaves with the main business districts, reducing the need to buy cars.

The local population owns fewer than 80 vehicles for every 1,000 people, at the bottom 40 per cent of global rankings.

Still, the supply of car parking spaces has lagged far behind the growth in vehicle ownership, as developers build homes with higher profit margins at the expense of parking bays.

〈The Straits Times, Oct 21, 2021〉Local investors already have enough on their plate but the travails of China's property sector just won't go away and helped turn the market south yesterday.

The wary mood sent the Straits Times Index (STI) down 9.58 points or 0.3 per cent to 3,188.50, after recovering some lost ground in the last trading hour.

Losers beat gainers marginally 240 to 236 on the broader market on trade of 1.9 billion shares worth $964.14 million.

The focus of concern remains Evergrande, the world's most leveraged property player, and its struggles to avoid default, which could come as early as Monday.

The firm's woes appeared to be weighing on markets right across Asia, said Oanda senior market analyst Jeffrey Halley.

He noted that the Hong Kong-listed Evergrande and the China property sector appeared to have affected investor sentiment in the region, while an overnight weak Nasdaq performance had a negative impact on the closely correlated North Asian heavyweights.

〈The Standard, Oct 20, 2021〉China home prices see first fall in 6 years

Policymakers face challenges as slump in property sector drags economy to its slowest quarterly growth pace since September 2020

China's monthly benchmark price index of new homes fell for the first time in more than six years, confirming the property slump that dragged the nation's economy to its slowest quarterly growth pace since September 2020.

The average cost of a new home dropped by 0.1 per cent in September from last year, according to the data of 70 major cities tracked by the National Bureau of Statistics released yesterday. The monthly decline was the first since May 2015, in contrast to the 0.2 per cent gain in August.

"The housing market is clearly cooling, and the major issue now has turned from [a problem of] overheating to [being] too cold," said Yan Yuejin, director of E-house China Research and Development Institute.

The slowdown underscores the challenges facing China's policymakers and monetary authorities in cooling the speculative fervour in the property sector - and its outsize role in the world's second-largest economy - without sending the entire industry into a deep freeze.

〈Asian Post, Oct 19, 2021〉Smallest units now cost more than the typical residence in the city, and are cheaper only than luxury homes bigger than 1,000 sq ft, data shows

A property bull market in Hong Kong, the world's most expensive major city for 10 consecutive years until 2019, has trickled over to inflate the prices of even the smallest living spaces.

The average cost of new micro flats - those smaller than 200 sq ft - rose to HK$25,512 per square foot in the first nine months of 2021, according to Midland Realty data. That beat the HK$21,680 per square foot average price of a typical flat measuring 400 sq ft to 600 sq ft, and was cheaper only than the HK$30,460 average price of luxury homes bigger than 1,000 sq ft.

The bar chart illustrating home prices of various sizes looked like a U shape with extended bars on both ends because "Hongkongers with limited budgets can only [opt] for smaller lump sums", and so the smallest flats sold out first, said Buggle Lau, chief analyst at Midland.

"No one wants to live in tiny flats" if they had a choice, he said.

The dismal state of the housing sector underscores the challenges facing policymakers as they grapple with measures to make homes more affordable, especially for young families and those struggling to get on the property ladder.