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Property News Weekly Digest
2018/7/21
〈China Daily, July 21, 2018〉As the Hong Kong housing crisis rages unabated, the special administrative region government announced another round of measures. On the supply side, it will convert a few sites that were earmarked for private housing into Home Ownership Scheme apartment developments — units built by the government for sale at subsidized prices. The government also said it would delink HOS apartment prices from private home prices and give a bigger discount on HOS units. It is certainly encouraging to see the government making new efforts to ease the housing crisis but unfortunately it’s not going in the right direction. No matter how bold and creative the solutions are, the fundamental key to solving the problem is to increase land supply and therefore the number of housing units in Hong Kong.

As I said before, what the government is doing is “robbing Peter to pay Paul”, which means treating one problem by creating another, equally serious, problem.

The proposed conversion of some private housing sites into HOS use has prompted some local commentators to describe the solution as “Singapore style”. This is comparing apples to oranges.

Singapore has one of the highest, if not the highest, proportion of public housing in its housing stock. About 80 percent of its population own and live in government-built apartments while in Hong Kong, less than half the residents live in public housing, mostly as tenants. The Tenants Purchase Scheme launched some 25 years ago has not been successful. The difference between these percentages is far too big for the SAR government to increase the public housing ratio to Singapore’s level. It would be impossible to find the land to produce such high levels of new supply.

Even if the government could, in the immediate future, find vast tracts of land in the form of brown- and green-field sites to build public housing, obtaining the support of district councils and

〈Asian Post, July 21, 2018〉Land is the most precious resource in Hong Kong, but more than 70 per cent of its area is undeveloped.

The government also has HK$1.8 trillion in reserves. Despite this, our younger generation cannot envisage a future in which they own a home, and tens of thousands of our citizens have to live in subdivided units, with the entire population of 7.4 million crammed into less than 10 per cent of available land.

It is time to think about how to release all of these resources to serve the community, and to stop working behind the scenes for the benefit of our property tycoons.

I bet the Singapore government would not similarly be buying time by engaging in endless surveys, as the Lion City's focus is squarely on the overall benefit of its citizens, and on the competitiveness of Singapore as an international city.

It is also easy to heed the advice of President Xi Jinping: homes are for living in, not for speculation. I have two suggestions. One, bar mainland citizens and other non-residents from investing in Hong Kong's residential property.

Some Western governments, as well as authorities in mainland China, have this locals-only rule. Is Hong Kong still allowing non-residents to buy because of lobbying by the property tycoons?Watch: What drives Hong Kong's red hot housing marketTwo, introduce a capital-gains tax for all investment properties of up to, say, 50 per cent of the sale profits. I bet that would make property prices come down to an affordable level, and we would not have a property bubble so large that it could kill our economy when it bursts.

〈Asian Post, July 20, 2018〉Mainland companies' appetite for Hong Kong property shows no sign of abating, with a luxury development near Deep Water Bay selling for a record HK$5.93 billion, the largest single transaction by value in the residential market, according to Land Registry data released yesterday.

"It is a record in the private residential site sales market in terms of consideration," said Cathie Chung, the national director of research at JLL, adding that the deal for 39 Shouson Hill Road had smashed the previous mark of HK$5.1 billion set by the 2015 sale of Ho Tung Gardens on The Peak.

"It is a rare site to find on the market - like a collectible." The buyer, a mainland developer called Charm Glory Resources, owns 44.85 million square metres of development and investment property in 56 cities including Shenzhen, Shanghai and Beijing, and reported a core profit of HK$19.2 billion last year.

Upon redevelopment, Chung said the houses that would be built on the site could fetch HK$135,000 per square foot or more in terms of saleable area.

Thomas Lam, a senior director at Knight Frank, said the high price was mainly because of the plot's redevelopment value.

"The buyer will probably demolish the existing buildings and redevelop it into super deluxe houses," he said, adding that the site could yield a total gross floor area of 69,000 sq ft, or HK$85,927 per square foot.

〈The Straits Times, July 19, 2018〉Hong Kong's red-hot property market is expected to cool in the coming months with the increase in private home prices projected to slide in the second half of the year.

Private home prices in the city have tripled in the past decade, making it one of the world's most expensive places to buy a home.

The prices rose 12 per cent in the first half of this year, exceeding S&P's estimates of 5 per cent to 10 per cent for the full year.

S&P analyst Cindy Huang told The Straits Times prices would still rise in the later half but at a slower "low single-digit" pace.

Nomura has maintained its January projection that Hong Kong's private residential price growth will be flat for the year.

BMI Research yesterday said it expects price growth to slow in the coming quarters, given that buyers cannot afford the units and that government cooling measures will ramp up the supply of homes.

It noted that home price growth continues to outpace that of income and gross domestic product (GDP) expansion, resulting in a lower take-up rate in the private housing market.

The rise in private home prices has moderated from the peak of 21.6 per cent year on year in June last year to 14.7 per cent year on year in May this year, according to Hong Kong's Rating and Valuation Department (RVD).

Based on RVD data, private home sales fell to an average of 11,705 units per year in the 2007-2017 period, from 20,395 units per year from 1996 to 2006, BMI said.

Tighter controls on Chinese developers will also help ease the property market as they cut their land acquisition in Hong Kong.

〈The Standard, July 18, 2018〉Commercial buildings in Hong Kong are very much sought after of late by investors, and developers are keen to go into this segment of the property market. Or get out of it if the price is right.

One such building going up at No 68 to 72C in Kimberley Road, Tsim Sha Tsui, was snapped up recently, with Henderson Land Development getting about HK$2.5 billion or HK$24,000 per square foot, despite the property still under construction.

When completed, the building will have a total gross floor area of 104,136 sq ft. The transaction is the largest in recent years in the district.

Sources close to the purchaser said the property was acquired by a mainland investor under the name of an overseas firm, which intends to hold on the commercial building for investment income.

Sources said that while the property was located in a non-core area of Tsim Sha Tsui, many offers came in as commercial property prices spiralled.

Some agents said the price that Henderson Land managed to secure for the property was reasonable and that the buyer could expect a 3 percent rate of return if premises in the building are all rented out.

The site where the commercial tower is going up used to be home to an old building, a majority share of which had been held by Henderson Land since the 1980s.