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Property News Weekly Digest
〈Asian Post, April 6, 2019〉But industry body's offer to ensure 20 per cent of new flats are sold on open market is criticised by lawmaker as government says it may take action

The industry body for Hong Kong's property developers said its members would ensure from now on that 20 per cent of flats in a new project are sold on the open market, as the government warned it could take action against those that sell through tender.

Lawmakers have slammed developers for the increasingly widespread and "unfair" practice of selling new flats through tender, a marketing tactic they claim puts buyers at a disadvantage. They were also quick to criticise yesterday's decision by the Real Estate Developers Association (REDA) for not going far enough.

According to government figures, use of the tender process, in which homes are sold to the highest bidder, has doubled recently as builders try to push up prices amid a slumping market.

The practice has raised concerns among senior government officials and regulators, who have urged developers to use the more transparent method of selling on the open market.

"Think how a buyer has saved for his whole life to buy a property, only to find himself in an unfair transaction environment, not fully informed and not even knowing the price," Andrew Wan Siu-kin, deputy chairman of the Legislative Council's housing panel, said.

Yesterday, REDA said its members - about 90 per cent of Hong Kong's builders - had now agreed to sell a fifth of new units in each batch of "non-luxury" projects on the open market. The industry body had called a meeting to discuss the issue after saying the rise in small flats being sold via tender was "not what we want to see".

〈The Standard, April 5, 2019〉Hong Kong property investors are salivating over investing in the Greater Bay Area market after Beijing announced an outline development plan for it in February. However, experts remind investors to be cautious of the different property investment traps and not to trust any unofficial information.

A number of Hong Kong investors have banded together to establish a corporate entity in Zhuhai to acquire commercial properties in the prefecture-level city through the firm.

Cheung Fai-wing, operations manager for Hong Kong agency, Lok Shing Property, which focuses on SAR clients wanting to invest in the Greater Bay Area, explained the hot market there is being driven by the attractive 15-percent corporate income tax in Zhuhai's Hengqin free trade zone, which is lower than in other mainland cities.

Meanwhile, Zhuhai also practices the policy of "Hong Kong taxation for Hong Kong people" for eligible investors, and as a result, commercial property prices have jumped nearly 20 percent from last year, Cheung said.

Pierre Tsoi Jun-peng, chief executive of Dragon Hover International Property Consultants, said that some developers launched a lot of promotions to lure buyers even before the area's development plan was outlined.

The gimmicks included gifting out cross-boundary vehicle licenses as well as electronics and renovation services.

However, Tsoi said most of the units covered by the promotions are located in the less popular markets, such as Jiangmen, Zhaoxing and Huizhou, where developers fear the flats would not be as easy to sell out.

〈Asian Post, April 5, 2019〉Victor Li Tzar-kuoi had a surprise for shareholders last month when he announced the 2018 earnings of the flagship company founded by his father: the highest dividend growth among Hong Kong's listed property developers.

For CK Asset Holdings, the record payout growth - even if its core profit missed consensus estimates - was the culmination of a three-year restructuring that transformed one of the city's best-known developers into one of Asia's largest conglomerates, with operations spanning energy, global infrastructure and aircraft leasing.

Property sales, the entirety of Cheung Kong Property's revenue when Li Ka-shing established the developer in Hong Kong, made up 45 per cent of CK Asset's income last year, seven months after Victor Li took over as chairman.

"CK Asset is like a private equity fund now, like Canada's Brookfield [Asset Management]", the 120-year-old company with US$330 billion of assets under management, said Jonas Kan, head of Hong Kong research at Daiwa Capital Markets. "They are huge, they look for investment opportunities across the risk-return spectrum, with more exposure on real estate and infrastructure."

The transformation, driven by more than HK$100 billion of acquisitions in 2017 and 2018, increased the conglomerate's recurring revenue to more than 50 per cent of total revenue last year, compared with 2016, according to Gerald Ma Lai-chee, CK Asset's general manager of corporate business development.

This diversity reduces CK Asset's reliance on the city's property market and shields it from political uncertainties such as the US-China trade war and Britain's exit from the European Union.

〈China Daily, April 4, 2019〉Private property transactions in the primary market soared 95 percent in the first quarter, compared with the same period last year.

Some 5,250 were registered, the highest first-quarter transactions since 2004, ahead of the looming vacancy tax.

LePont in Tuen Mun sold 697 units, accounting for 75 percent of the total project, reaping HK$4.4 billion. Vanke Property (Hong Kong) said that only 15 percent of the units were sold by tender.

Henderson Land recorded 3.4 times over-subscription for the 78 units in The Addition in Cheung Sha Wan, and general manager of sales Thomas Lam Tat-man said it could launch more units tomorrow, and there is room to increase the price.

Cushman & Wakefield's Greater China vice president and head of consulting Alva To Yu-hung expects local property prices to rebound 15 percent for the first half year from the January low.

Sun Hung Kai Properties (0016) said developers will discuss sales by tender with the Real Estate Developers Association.

Meanwhile, its apm mall in Kwun Tong has invested HK$3.6 million to set up an Easter Sunday promotion project Beauty Lab, from April 1 to April 22, and expects turnover to hit HK$180 million, up 10 percent from last year. It expects visitors to the mall will increase by 12 to 15 percent to 31 million in the first quarter, and business volumes to reach HK$1 billion to HK$1.2 billion, with double-digit growth.

〈Asian Post, April 3, 2019〉Hong Kong developers are poised to flood the market with more than 9,000 homes - nearly half the government's annual target - to cash in on rising prices.

But analysts say price rises could be dampened as buyers are wooed with hefty discounts.

Derek Chan, head of research at Ricacorp Properties, said he expected developers to speed up their sales plans to take advantage of the recovering appetite. "However, to win over buyers amid the likely fierce competition, developers will not tag their homes at a much higher price," he said.

Chan predicted that after a pick up in prices in the first quarter of about 4 per cent, the pace would slow to 3 per cent in the second quarter as supply increased.

Prices had dropped 9.2 per cent from August to December, according to data from the Rating and Valuation Department.

But buyers have been emboldened by a stock market rally in Hong Kong and the mainland, the US Federal Reserve's dovish stance on interest rate rises for the rest of the year, and confidence the trade war between the US and China would be resolved soon.

A straw poll by the Post showed that more than half of market observers believed the correction in home prices was over.

"The upcoming pricing strategies offered by developers will indicate their confidence and the outlook of the sector," said Vincent Cheung, managing director of Vincorn Consulting and Appraisal.