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Property News Weekly Digest
2019/1/26
〈Asian Post, January 26, 2019〉The number of private homes completed in Hong Kong last year hit a 14-year high, beating the government's target.

Figures released by the Transport and Housing Bureau yesterday showed that construction of 21,000 new houses was completed, well above the official target of 18,000.

"This marked a 14-year high and the first time the number has surpassed the level of 20,000 in 14 years," said Wong Leung-sing, senior associate director of research at Centaline Property Agency.

"Future private housing supply will remain at about 20,000 for a long time. Now we see a stable supply coming, the outlook for the housing market will depend on demand, and that will be largely affected by the economic environment in Hong Kong and the global market," Wong said.

"When the economy slows, home demand could be affected."Some 93,000 flats may become available in the next three to four years, including 9,000 that are already completed but not sold and 74,000 currently being built, according to the housing bureau.

They have dropped by almost 10 per cent from a peak in August 2018 as higher mortgage rates, a wobbly stock market, a rush of new developments being offered for sale and a slowing economy dampened buyer enthusiasm.

〈The Standard, January 24, 2019〉Some mainland cities are taking small steps to boost their property markets as the government wrestles with trying to keep housing affordable while not damaging one of the economy's key areas.

The changes have included lifting rules prohibiting homeowners from selling properties for two years after purchase, lifting restrictions on the sale of commercial flats - which have shorter leases - and making it easier for residents to buy homes in other cities in their home provinces.

Analysts said that it was unlikely the central government would reverse its overall policy of keeping the market in check, but local governments are being given leeway in an acknowledgement that a one-size-fits-all policy has not been working in the nation's diverse local property markets.

"The policy message is still to keep real estate under control, with differentiated local policies," said Robert Ciemniak, chief executive of Real Estate Foresight.

Housing and related sectors account for about one-third of gross domestic product and home ownership makes up about 70 per cent of the average person's wealth. Local governments own the land and rely heavily on sales to developers to fund local development and infrastructure.

Home prices had skyrocketed until about the middle of last year, prompting measures to cool the market at both local and national levels as authorities fretted about the possibility of a property bubble and the threat to financial stability.

However, the effects of the measures were uneven as prices started to rise less quickly in big cities such as Beijing and even to fall in medium-sized cities like Hangzhou and Xiamen, but continued to rise in many smaller provincial cities and towns.

〈The Standard, January 24, 2019〉Sales of new residential properties appeared to have regained momentum of late. Not surprisingly, some real estate agents cried out to clients that it would be foolish not to buy now.

Since peaking in August, homes have fallen nearly 10 percent in value overall. If a flat slightly smaller than 500 square feet was sold last year for HK$7.7 million, or HK$15,500 per square foot, it would be more than HK$700,000 cheaper now.

It would be quite the contrary if Chief Executive Carrie Lam Cheng Yuet-ngor's remarks made in Davos, the scenic Swiss resort where the world's wealthiest and most powerful have gathered for their summit, are to be taken seriously.

Her comment was carried by Bloomberg, but news on the China-US trade war caused it to be buried.

"I feel there is still room for some correction" was what Lam said in the interview. But by how much? She declined to provide an estimate, but said her goal was for a family to be able to spend 40 percent of income on mortgage costs. Right there, the report ended.

That's undoubtedly a rather interesting comment. Although it's widely known that one of Lam's highest priorities is to make housing in Hong Kong affordable to the public again, it's the first time she has so publicly given the goal a numerical definition.

〈Asian Post, January 23, 2019〉Foreign investors have significantly increased their presence in China’s commercial real estate sector, investing 78 billion yuan ($11.5 billion) last year, a record since 2005 and up 61.5 percent year-on-year, according to recent data.

Throughout 2018, commercial real estate transactions hit a record high of 251.7 billion yuan, up 4 percent year-on-year, according to a report on China’s 2019 property market outlook by global real estate consultancy CBRE.

Foreign capital flows into the sector snowballed from 26 billion yuan in 2016 to 48.3 billion yuan in 2017, the data showed.

The central authorities’ deleveraging campaign has tightened domestic financing channels and affected domestic investors’ financing capacity, said Jim Yip, head of capital markets for JLL China.

International investors are embracing more opportunities to secure deals amid weaker competition from their domestic counterparts, said James Macdonald, head and senior director of Savills China research.

According to JLL’s data, 56 percent of the nation’s commercial property investment went to Shanghai, which is considered a stable and long-term investment destination among investors both from home and abroad.

Both of the two largest deals made by foreign investors last year took place in Shanghai. These were CapitaLand’s and Singapore sovereign wealth fund GIC’s purchase of Shanghai’s tallest two towers at Harbor 55, and Blackstone’s purchase of Mapletree Business City.

〈China Daily, January 23, 2019〉Developer Sino Land managed to sell only 75 per cent of flats put up for sale at heavy discounts at its Mayfair by The Sea 8 development in Tai Po.

The company sold 171 out of a first batch of 228 flats .The sale comes amid warnings by analysts about further declines in prices. And at an average price of HK$13,228 per square foot after the discount in the first price list, the property is going for 26.5 per cent less than the HK$18,000 per square foot fetched by St Martin, another Tai Po project launched last June.

According to Centaline Property Agency, this shortfall is down to a high supply of three-bedroom flats in the Pak Shek Kok area.
"Two-bedroom flats were popular and sold quickly, but the three-bedroom apartments are proving difficult to sell, because there are [plenty of] choices [in the area]," said Louis Chan, chief executive of the residential division at Centaline.

The development was also designed as a luxury residential one, and does not match the needs of first-time buyers looking for smaller flats. Among the 228 flats on sale yesterday, 130 are two-bedroom units and 96 have three bedrooms.

Prices at Mayfair start at HK$6.07 million for a 490 sq ft home, or HK$12,396 per square foot. The development received 1,189 registrations of interest, which meant more than five people were competing for each flat.

Analysts, meanwhile, again warned of a slowdown in economic growth in Hong Kong owing to rising interest rates in the United States, and the US-China trade war.

"Hong Kong and Singapore are most at risk of a global slowdown, being open economies with a sizeable financial services sector," according to a report led by Harry Tan, head of research, Asia-Pacific, at Nuveen Real Estate, a global property investment manager. "Sentiment in Hong Kong will also be overshadowed by rising US rates, by virtue of the dollar peg."