〈China Daily, May 11, 2019〉The second commercial property plot on the runway of Hong Kong's former airport got only a few bids when a government tender closed yesterday, as the absence of a deal in the US-China trade war provided an anticlimax to a week of record-breaking sales in the city's home market.
Area 4C Site 4 on the Kai Tak runway, valued at HK$11.2 billion, or HK$13,000 per square foot for the 863,000 sq ft gross-floor area, received six bids, according to the Lands Department. A January tender for the first commercial plot was scrapped after the nine bids received failed to meet the government's minimum price.
Four days earlier, a plot of residential land on the runway sold for HK$12.6 billion, a record price that should translate into HK$30,000 per square foot in sales prices once homes are built on the site, which would translate into HK$30 million for a 1,000 sq ft flat.
"Developers are choosing to be cautious, and adopt a wait-and-see approach, after the escalation of the trade war," said Vincent Cheung, managing director of Vincorn Consulting and Appraisal, who expected at least seven to eight bids for the oceanfront plot. "The issues between the US and China will continue much longer than expected."
Office towers, shopping centres and hotels are more capital intensive than building flats, another fact that gives developers pause, Cheung said.
The oceanfront plot, located near the city's cruise terminal, offers a full view of Victoria Harbour, and will host an 800-room hotel and some office blocks.
US-China negotiations meant to end the year-long trade war ended at noon when the tender closed, with 25 per cent of US tariffs on US$200 billion of Chinese imports going into effect. Hong Kong's benchmark Hang Seng Index fell 5 per cent this week.
〈Asian Post, May 10, 2019〉Hong Kong's property bull market has another 10 years to run, as housing supply fails to keep up with the new population pouring in from the Greater Bay Area, according to Swiss bank UBS, which correctly picked the bottom in the city's short-lived price correction last year.
Home prices will continue spiralling upwards as buyers compete to get their hands on residential property, according to the bank's real estate research team, led by John Lam.
Hong Kong's housing stock is estimated at 45,000 homes a year, 25 per cent short of UBS' calculation.
"Our analysis based on demographics and non-local demand suggests annual housing demand would stand at 60,000 units," Lam said. The Greater Bay Area, a cluster of 11 southern Chinese cities including Hong Kong and Macau, "should enhance integration [within] the area through improving software and hardware, lowering transaction costs and boosting economic activity. We believe this will benefit Hong Kong property".
UBS is not alone in being bullish. Moody's Investors Service said Hong Kong's home prices would rise between 8 per cent and 10 per cent over the next 12 to 18 months, revising its earlier estimates of a drop of up to 15 per cent, with its vice-president Stephanie Lau predicting the median home price to surpass its July 2018 record.
The forecasts by UBS and Moody's pose a policy challenge for Chief Executive Carrie Lam Cheng Yuet-ngor and her administration, which have made affordable housing a key policy objective.
〈China Daily, May 10, 2019〉If you don’t already own a home, you may be hit by the irresistible urge, like many other prospective homebuyers are, to rush to your nearest property agent to look for an apartment that fits your budget.
That’s the state of the latest property rush, which has pushed up home prices in Hong Kong by an average of 3 to 4 percent in the past several months. The price increase, reversing the downtrend in the latter half of last year, has set in motion a market cycle fed by people’s fear that if they don’t buy now, they will never be able to afford to do so later.
The latest buying spree was, in turn, triggered by indications that interest rates will not be going up, at least in 2019, resulting in a sudden turn in buyers’ sentiment, which has apparently caught even the developers by surprise.
Following the herd instinct is not uncommon among stock investors, especially in less-mature markets. But buying properties is a much longer commitment than buying and selling stocks, which can be done multiple times in a single day.
While the fear of missing the boat is understandable, there is really no big rush for the average homebuyer. The gap between supply and demand is not going to widen much further as developers are gearing up their production to meet the demand surge. Industry sources estimated that there will be an additional 80,000 new apartments due for completion in the remaining months of 2019.
〈Asian Post, May 9, 2019〉Financial Secretary Paul Chan shares plans for how the government intends to build more affordable public housing by giving a greater role to the MTR Corp and URA
As Hong Kong's astronomical property prices continue to rise, Financial Secretary Paul Chan Mo-po has pledged, in a rare move, to give the city's railway provider and urban redevelopment authorities a greater role in providing affordable housing.
"Property prices now are very high," Chan said in an exclusive interview with the Post. "We understand people's frustration. The government will make an effort to increase land supply and subsidised housing."
Some measures would include turning more urban redevelopment projects into subsidised housing for sale to the young middle classes, as well as reserving sites along railway lines for public housing, he said.
The city is experiencing one of its longest upward price cycles, thanks to consistently low interest rates that have fuelled the world's most expensive housing market.
In a boom spanning 15 years broken only by a few short downturns, private housing prices have increased more than fivefold. In a study last month, real estate investment firm CBRE found a home of about 600 sq ft cost an average of HK$9.6 million, the highest of 35 global metropolises.
In March, prices of pre-owned homes rose 2.9 per cent on the previous month - the fastest pace in about three years - according to figures from the Rating and Valuation Department, showing how the market was gathering steam.
〈Asian Post, May 8, 2019〉A newly refurbished heritage project in the tourist hotspot of Tsim Sha Tsui is the result of an unusual collaboration.
The revamp of 1881 Heritage, a historical building that housed the former Marine Police Headquarters, involved the two sons of Hong Kong's richest man, Li Ka-shing, and their companies working together on a project for the first time.
Victor Li Tzar-kuoi, 54, and Richard Li Tzar-kai, 52, yesterday co-hosted a ceremony with Chief Executive Carrie Lam Cheng Yuet-ngor for the opening of House 1881, which comprises a boutique hotel and five restaurants, located within the main building at 1881 Heritage. Victor Li, who took over as chairman of CK Asset Holdings from his father last year, has always worked at the property developer.
Richard Li worked at Hutchison Whampoa, the predecessor to CK Hutchison, but left the group in the 1990s and set up his own business.
His telecommunications and financial conglomerate, Pacific Century Group, includes the life insurance arm FWD Group, which was involved in the project.
Li Ka-shing, 90, had a net worth of US$31.9 billion in February, according to Forbes.
Richard Li ranked as Hong Kong's 21st richest man on the same list with a net worth of US$4.5 billion.