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Property News Weekly Digest
〈Asian Post, March 16, 2019〉Hong Kong's housing market has slipped well down the list when it comes to the pace of annual price percentage gains among major cities worldwide, according to the latest survey by Knight Frank.

The city fell to 22nd place from the No 1 spot a year ago among 56 global markets tracked, as average home prices tumbled 6.2 per cent in the final three months of last year, according to the Knight Frank global house price index.

For the 12 months to December, Hong Kong home prices rose 5.8 per cent, easing from a 15.7 per cent gain in 2017.

"Hong Kong's slide was an expected consequence of: a further tightening of housing policy in June 2018; a volatile stock market; a strengthening currency; and the global trade dispute weighing heavily on buyer sentiment," Knight Frank said.

The moderation in price growth underscored the effectiveness of cooling measures rolled out by the government over the past few years, including a higher stamp duty on certain transactions and an increase in the down payment requirement.

The Hong Kong Monetary Authority also raised loan rates and ordered banks to tighten lending rules.

Slovenia topped the global rankings with a 15.1 per cent rise in home prices last year. Mainland China ranked third with a 10.7 per cent increase.

Ricacorp head of research Derek Chan said a recovery in Hong Kong housing prices would start soon, pointing to indicators such as an improving stock market and easing US-China tensions.

〈Asian Post, March 16, 2019〉Seventeen people have been arrested on suspicion of defrauding 91 victims out of HK$64million by posing as financialadvisers and money lenders and extorting cash for mortgages.

The 11 Hong Kong men and six women, believed by police to belong to two criminal syndicates, were detained in a series of raids starting on Thursday on charges of violating the money lender ordinance and conspiracy to commit fraud. One of the targets was a financial services company in Fortress Hill.

Police said the scam involved calling people who had applied for first or second home mortgages and telling them that their loan agreements were illegal or in violation of bank policies

The property owners were then told to pay the mortgage as soon as possible to avoid an encumbrance that would stop them from selling or transferring the homes.

The victims were allegedly advised by the suspects to borrow from the licensed money lender they referred them to, and give the cash to the fake financial advisers to pay off the mortgages. The intermediaries, however, took the money and disappeared.

"We have strong evidence showing that at least onelicensed money lender was incollusion with the financialintermediaries," said Chan Tin-chu, superintendent of the Commercial Crime Bureau.

He said police investigated cases from 2017 to early this year, with the biggest one involving a loss of HK$2.8 million.

〈China Daily, March15, 2019〉Secondary cities in the United States are becoming more popular with property investors looking for better returns than in New York or Los Angeles, despite possible higher risks and difficulty reselling in an economic downturn because of lower liquidity, real estate experts believe.

"The cap rate difference in Charlotte, North Carolina and New York was something like 120 to 150 basis points. That's significant, and that's where the bargain aspect comes in," said Dan Flanigan, managing partner of the New York office of US law firm Polsinelli. "You have a much better shot at getting 9 to 12 per cent in these secondary cities."

Flanigan, who said his firm had handled real estate deals involving investors from mainland China and Hong Kong in recent years, was in the city to meet clients and attend a conference.

Data from London-based Real Capital Analytics showed investments from Hongkongers and mainlanders in cities such as Salt Lake City, Austin, Nashville, Dallas and Seattle increased annually from between nearly a third and as much as tenfold in 2018.

These included income- producing assets, defined as office, retail, industrial, hotels, flats and senior housing.

In Austin, the capital of Texas, investments worth about US$100 million were received in 2018, up from US$7.7 million in 2017. Nashville had zero mainland and Hong Kong investments in 2017, but received US$101.3 million last year.

Meanwhile, their real estate spending in Los Angeles was US$576 million in 2018, easing from US$2.2 billion in 2016. In New York, they put in US$380 million last year, an 89 per cent drop year on year, according to Real Capital Analytics.

〈China Daily, March 14, 2019〉China has the world's largest community of property tycoons, populated by a generation of developers who grew wealthy during three decades of rapid growth when having a roof over every head became a national goal.

China had 108 dollar-denominated property billionaires, out of 239 around the world, according to the 2019 Hurun Global Real Estate Rich List. The United States, with an economy that is one-and-a-half times larger, has 26 real estate billionaires, while Britain has 17 and Hong Kong has 25.

China's economy expanded at an average clip of 9.7 per cent every year since data collection began in 1992, lifting 500 million people out of poverty and creating a middle class of 140 million households, according to World Bank estimates. That has attracted millions of people to migrate from the countryside and villages into the cities in search of jobs and better income, leading to a surge in demand for housing.

"The urbanisation mega trend in China has driven the biggest wealth explosion in the history of world, with the result that most of the world's largest real estate developers today come from China," said Rupert Hoogewerf, chairman and chief researcher of the Hurun Report.

Housing on the mainland used to be provided by the state during the early days of the Communist Party's centrally planned economy, part of the benefits of living in a socialist welfare state. Private housing only emerged two decades ago as the government experimented with capitalism to allow homes to be sold for profit, with the country's first land sale taking place in 1987.

China's sales of new homes topped US$1.7 trillion in 2017, seven times the total transactions in the US, according to Stansberry Churchouse Research. On the mainland, one in five dollar billionaires is a property developer.

Seven of the world's top 10 property tycoons is Chinese, led by Evergrande's chairman Hui Ka-yan, also known as Xu Jiayin in his native Henan province, with an estimated net worth of 250 billion yuan (HK$292.5 billion).

〈China Daily, March 13, 2019〉 Hang Lung Properties Ltd received more than half of its rental revenue in the fiscal year 2018 from projects in the Chinese mainland, and the executive director of the Hong Kong-based developer expects the ratio to grow further along with its business expansion there.

In its annual fiscal report of 2018, Hang Lung Properties reported that its eight projects in the Chinese mainland contributed HK$4.24 billion ($540.7 million) in rent to its HK$8.18 billion revenue, and Shanghai accounted for 65.9 percent of its total rental revenue generated from the mainland.

“We are positive toward the (Chinese) commercial property market in the long term. The Chinese mainland will continue to increase its weighting in our rental revenue, and will probably reach between 60 percent and 65 percent in five years,” said Norman Chan, executive director, Hang Lung Properties Ltd.

According to Chan, since its first project was unveiled in Shanghai in 1999, Hang Lung has taken on the construction and operation of 11 projects in nine cities in the Chinese mainland.

“Projects in the mainland are the long-term vision for Hang Lung Properties. We now have more commercial property space in the Chinese mainland than in Hong Kong, and the revenue is growing steadily. The mainland and Hong Kong together make a great and long-term foundation for Hang Lung Properties,” Chen said.

In the real estate sector, once GDP per capita reaches a certain level, commercial property will play a leading role, and can be used for office space, shopping malls, logistics, education, research and development, and healthcare, Feng Lun, founder of Vantone Holdings was quoted as saying by China News Service.