Hong Kong’s luxury home prices may rise as much as 15 per cent thisyear, and there are no bubbles in the city’s and China’s propertymarkets, said Cheung Kong (Holdings) Ltd, the builder owned by Asia’ssecond-richest man, Li Ka-shing.
Prices for luxury homes may increase 10-15 per cent this year, andfor new mass-market homes 15-20 per cent, said Cheung Kong executivedirector Justin Chiu in Hong Kong yesterday. Revenue from China homesales may exceed 30 billion yuan (S$6.14 billion) this year, he said.That compares with his September forecast of 1.5 billion yuan for 2009sales.
‘I don’t really see a bubble,’ Mr Chiu said. ‘There shouldn’t be toomuch concern about the governments trying to crush the market.’ MrChiu’s comments pit him against investor Jim Rogers, who said onTuesday that real estate prices in the city and Shanghai are in abubble and ’should decline’. Property prices in 70 cities across Chinaclimbed 7.8 per cent in December, the fastest pace in 18 months. HongKong’s real estate prices rallied the most among the world’s majorhousing markets last year, according to property adviser Knight FrankLLP.
Prices in the last six months of 2009 rose by 30 per cent in HongKong and 20 per cent in China, leading Mr Chiu to conclude thatspeculators may be at work.
‘We think that the substantial increase in such a short time, meansthat there could be a speculation element,’ he said. ‘That’s why Iadvise buyers to really see whether they have the means to commit tobuying an apartment. They should be careful.’
Record new loans fuelled a 75.5 per cent jump in China’s propertysales last year. Home prices in Hong Kong, a trading and financial hubfor China, are at their highest in almost 12 years, leading the WorldEconomic Forum and Goldman Sachs Group Inc to caution about theformation of asset bubbles.
Homes sales in China, Hong Kong and Singapore by Cheung Kong, theworld’s second-biggest developer by market value, may exceed HK$100billion (S$18 billion) if the company obtains government consent forall projects, Mr Chiu said.
Cheung Kong’s share price fell 1.9 per cent to HK$98.10 as of 2.40pm in Hong Kong. The stock’s 37 per cent gain last year made it 2009’sworst performer in the six-member Hang Seng Property Index. It hasdropped 1.8 per cent this year, compared with the 4.5 per cent declinein the index.
Fred Hu, Goldman Sachs’s chairman for Greater China, said on Jan 18that property prices in China require monitoring for signs of bubblesforming.
Prices at some luxury residential projects in Shanghai doubled lastyear, with Shui On Land Ltd’s Casa Lakeview recording sales of 100,000yuan per square meter in December, Lee Wee Liat, an analyst at NomuraInternational Hong Kong Ltd, said last week.
Mark Mobius, who oversees US$34 billion of developing-nation assetsat Templeton Asset Management Ltd, disagrees with Mr Rogers, saying onJan 7 that the bubble in China’s property market isn’t about to burst.Gross domestic product rose 10.5 per cent in the fourth quarter from ayear earlier, according to the median of 41 forecasts in a BloombergNews survey for the release scheduled today.
‘The Chinese will act rationally and they’re not going to kill the market,’ he said.
Mr Rogers, author of A Bull in China, said in on Tuesday that realestate in Shanghai and Hong Kong is ‘very overpriced’. Hong Kong‘Limited’ Garry Evans, head of global equity strategy at HSBC HoldingsPlc, said in a Bloomberg Television interview on Tuesday that ‘China isno way near a bubble’. Hong Kong developers, including Kerry PropertiesLtd, Shui On and Hang Lung Properties Ltd, are building homes, officesand shopping malls in China to capture market share in the world’sfastest-growing major economy. The strategy will continue even as Chinaacts to cool the property market, analyst Adrian Ngan said.
‘It’s a long-term strategy, it’s a must, because the growth in HongKong is very much limited,’ Mr Ngan, a Hong Kong-based analyst at CCBInternational Ltd, said before Mr Chiu’s comments.
To cool property speculation, China this month reinstated a salestax on homes sold within five years of their purchase, and thecountry’s Cabinet on Jan 10 urged strict applications of a 40 per centdown-payment requirement for second homes.
China accounts for about 10 per cent of Hong Kong-based Cheung Kong’s earnings, Mr Ngan said.
Ronnie Chan, chairman of Hong Kong-based Hang Lung Properties Ltd,said the tightening measures in China will not have an impact on thecompany’s real estate projects in the country because ‘we have zerodebt’. Hang Lung’s strategy of focusing only on developing commercialproperties in China helps the developer avoid being affected byvolatility in residential prices, the target of tightening efforts, MrChan said at a financial forum in Hong Kong yesterday.
Hong Kong home prices, where average values climbed 33 per cent,rose the most among the world’s major housing markets last year,according to property adviser Knight Frank LLP. An index of existinghomes is at its highest since March 1998, according to a weeklyweighted measure developed by Centaline Property Agency Ltd and theCity University of Hong Kong.
Billionaire Mr Li, 81, is dubbed ‘Superman’ by Hong Kong’s mediabecause of his track record for investing. He has a 41.7 per cent stakein Cheung Kong after adding to his holdings 29 times since December,stock exchange filings show.
Mr Li, estimated to be worth US$16.2 billion by Forbes magazine inMarch, correctly predicted in 2007 that China’s stock market was in a‘bubble’.
Source : Business Times – 21 Jan 2010