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Property News Weekly Digest
〈Asian Post, March 9, 2019〉MTR Corporation — Hong Kong’s sole railway operator — has reported falls in both net profit and revenue blamed on a decline in property income on the Chinese mainland.

The company announced its 2018 annual results on Thursday along with a leadership reshuffle, in which incumbent chairman, Frederick Ma Si-hang, will be replaced by Rex Auyeung Pak-kuen — the head of Lingnan University’s governing council — and current managing director, Jacob Kam Chak-pui, will take over as chief executive officer from Lincoln Leong Kwok-kuen on July 1.

The company’s 2018 net profit attributable to shareholders slipped 4.88 percent to HK$16.01 billion ($2 billion), while the top line saw a 2.72 percent drop year-on-year to HK$53.93 billion.

The board said the results were due to a sharp decrease in revenue from property development on the mainland — 99.14 percent lower than a year earlier — mainly because the contribution from Tiara — MTR Corp’s residential-and-commercial development project in Shenzhen — had been unsatisfactory.

However, profits from the company’s recurrent and underlying businesses, excluding property development and investment property revaluation, saw impressive jumps for the year ended Dec 31, 2018 — surging 5.13 percent to HK$9.02 billion and 7.11 percent to HK$11.26 billion, respectively.

“Overall, for 2018, patronage of our Hong Kong transport operations went up by 2.2 percent, driven by Hong Kong’s economic growth,” Leong said.

The board proposed a final ordinary dividend of HK$0.95 per share and a scrip dividend option will be offered, resulting in a full-year ordinary dividend of HK$1.2 per share. On the company’s fare revision plan, Leong said the adjustments will be announced at the end of this month in accordance with the fare adjustment mechanism. The Public Transport Fare Subsidy Scheme, which came into effect earlier this year, will continue.

〈China Daily, March 8, 2019〉Conglomerate Wharf Holdings is pinning its hopes on a rejuvenated property market in Hong Kong and the mainland to drive growth this year, following a disappointing 12 months.

"We are hoping to have a stronger year," chairman and managing director Stephen Ng Tin-hoi said. "The market is seeing more transactions and price are stabilising."

Japanese investment bank Nomura and S&P Global Rating expect Hong Kong property's market to starting rising again after dropping for five months since August 2018.

The company managed to sell only two houses and three flats at its flagship ultra-luxury project, Mount Nicholson, on The Peak last year, for HK$3.8 billion.

The project's reputation as Asia's most expensive address lost some shine after a buyer reneged on a HK$721.88 million deal for a house.

On the mainland, the company recorded a 5 per cent drop in contracted sales last year to 22.8 billion yuan (HK$26.7 billion).

Amid Beijing's cooling measures for the housing market, Wharf has set a 20 per cent lower mainland sales target for this year.

Ng was also not optimistic about the outlook for the logistics industry in the city amid a slew of uncertainties, including the US-China trade war, geopolitical tensions and Brexit.

Wharf-owned Modern Terminals, the second largest container terminal operator in Hong Kong, in January formed a new super alliance with three other operators to boost the company's business.

The alliance, which includes Hongkong International Terminals - owned by Tycoon Li Ka-shing's Hutchison Port Holdings and Cosco-HIT and Asia Container Terminals - will jointly operate and manage 23 of the 24 berths at the Kwai Tsing Container Terminal in Kowloon.

〈The Standard, March 8, 2019〉Hong Kong's luxury homes remained the second most expensive in the world for the seventh year in a row, according to the Knight Frank 2019 Wealth Report.

However, prime property prices grew just 1.8 percent year-on-year as of December 2018, falling from 17th to 47th in the report's index which measures market performance.

The realtor expects an up to 10 percent decline in luxury home prices and up to 5 percent decline in super-luxury home prices.

Thomas Lam, executive director, head of valuation and advisory, estimated that residential property prices would fall by 10 percent on average this year in the face of government policies, the Sino-US trade war and economic performance.

Meanwhile, Wheelock and Company's (0020) Monterey in Tseung Kwan O sold four houses by tender for over HK$214 million at an average price of HK$28,463 per square foot.

The homes were sized between 1,843 and 2,004 sq ft and their prices ranged from HK$50.07 million to HK$63.53 million.

Also, CORE45 in Kwun Tong sold all units on the 12th floor for HK$105 million, at an average price of HK$11,321 per square foot.

〈The Standard, March 7, 2019〉Property developer Chinese Estates Holdings yesterday reported its biggest profit plunge since 2010 as it sold a single home amid a cooling residential market last year.

The company, chaired by Lau Ming-wai, the son of billionaire businessman Joseph Lau Luen-hung, had a tough year in 2018.

The sole sale of a 4,170 sq ft luxury flat at the 55 Conduit Road project in Mid-Levels for HK$286.2 million contributed HK$125.4 million to the bottom line of Chinese Estates.

The apartment complex also set the record for the city's most expensive car parking space, when a 135 sq ft parcel sold in July for HK$4.8 million.

But this failed to halt a 25 per cent decline in gross profit to HK$719.11 million. Sales shrank 44.4 per cent to HK$843 million, Chinese Estates said in a filing to the Hong Kong stock exchange.

The company reported a HK$1.27 billion loss from investment in bonds, while gains from equity investments also plunged amid the slumping stock markets on the mainland and in Hong Kong.

Net profit tumbled 72.1 per cent to HK$1.06 billion from HK$3.8 billion in 2017.

With an estimated fortune of US$17 billion, Joseph Lau was a cornerstone investor in the 2009 initial public offering in Hong Kong by China Evergrande Group. Chinese Estates held 6.6 per cent of Evergrande as of August 2018, while Lau's wife, Chan Hoi-wan, held 2.4 per cent.

Evergrande, which listed at HK$3.50, closed at HK$25.90 yesterday, valuing Chan's stake at HK$8.2 billion and Lau's at an estimated HK$20 billion.

〈Asian Post, March 6, 2019〉In the first of a three-part series on the 'Greater Bay Area', we examine Nanshan's importance as a centre for information technology and the rising demand for grade A office space in the growing innovation hub

Eric Ng runs an information technology start-up in Hong Kong but operates a back office in Shenzhen's IT cluster of Nanshan.

He pays rent of 12,000 yuan (HK$14,000) a month for a 30 square metre office in the almost 20-year-old Keyuanxi Building, 40 per cent more than the going rate in Futian, as he wanted to be in the same area as tech giants Tencent Holdings and Huawei Technologies.

Ng employs a staff of six for back-end programming and web development for his food takeaway app, Goforeat, which he said catered to nearly 10,000 users in Central.

For Ng, Nanshan was an obvious choice.

"Nanshan is the centre of IT development in Shenzhen, so it was easy to recruit tech experts," said the 25-year-old entrepreneur from Zhongshan, Guangdong province.

The salary for a computer programmer in Nanshan was about HK$10,000 per month, compared with HK$28,448 in Hong Kong, data from recruitment website jobsDB showed.

In a little more than 20 years, Nanshan has evolved to become a thriving district with trendy cafes and restaurants, housing the country's most innovative firms in glass-walled skyscrapers on what was once empty land.

Access to the area has improved immensely after the opening of the high-speed railway - a major infrastructure project in the development of the "Greater Bay Area" - that connects Hong Kong to 44 cities on the mainland.

The Greater Bay Area is Beijing's blueprint to transform Hong Kong, Macau and nine Guangdong cities, including Shenzhen, into an innovation and technology powerhouse rivalling Silicon Valley and the Tokyo Bay Area.