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Property News Weekly Digest
2019/6/8
〈Asian Post, June 8, 2019〉A residential plot on the old runway at Kai Tak could fetch bids 10 to 33 per cent lower than a similar sale that took place in May as an escalation of the US-China trade war sends a chill through the property market.

The land, located at Area 4A Site 1, has a limited view of Victoria Harbour and can yield 1.08 million sq ft of gross floor area. The land tender opened yesterday and will close on July 19.

"The uncertainties brought by the trade war have damaged developers' appetite [for the site] as eventually it will affect sales in the future and that will result in higher holding costs," said Thomas Lam, executive director at consultancy Knight Frank.

Knight Frank forecast a range of HK$16,500 to HK$17,500 per square foot, lower than Area 4C Site 2, a plot with full sea view, which sold in May for HK$19,636 per square foot.

Colliers International head of valuation and advisory Hannah Jeong gave one of the most bearish forecasts, estimating the site would fetch HK$14,000 per square foot, about 30 per cent lower than the May sale.

The figure was also only 3.5 per cent higher than Area 4B Site 2, the cheapest residential plot on the former runway, which sold for HK$13,523 per square foot in December in the middle of the housing market's soft patch.

"Developers will not put forward aggressive numbers and we will see more consortiums taking part in bids as a way to diversify risk," Jeong said.

〈Asian Post, June 7, 2019〉K Wah International (0173) chairman Lui Che-woo suggests Hong Kong homebuyers to "wait-and-see" amidst Sino-US trade tensions.

His comments come as the developer's second housing project in Kai Tak, K Summit with 1,006 units, are to be launched next month.

In response to rumors of China intending to leverage its rare earths supply against the United States, K. Wah will maintain a similarly cautious approach towards land acquisition.

But despite a cloudy outlook for Hong Kong's property market, the company will launch new luxury housing within the next half of 2019 at Kowloon Tong 2 Grampian Road, and Shanghai Jiao Tao Wan, said Lui.

When asked about his retirement plans, the 90-year-old tycoon said, "For now I am still standing and I will tell you when I have a decision in the future."

Meanwhile, developers in the Hong Kong housing market show no signs of stopping.

Billion Development's The Horizon II in Tai Po will open the price list for 250 units and launch 50 units sold through tender next Tuesday, the largest offering number after the newest guidelines issued by the Real Estate Developers Association of Hong Kong. Sun Hung Kai Properties (0016) will launch phase 2 of Mount Regency in Tuen Mun earliest this month, offering 495 units ranging from 250 square feet to 591 sq ft.

Wing Tai Properties (0369) also plans to launch a new project in Tuen Mun, namely Oma Oma, in June, and CentraHorizon in Tai Po will launch 300 units. A homeowner of a 466 sq ft apartment in Kornhill in Quarry Bay decided to rent out instead of selling, and a 375 sq ft flat in Amoy Gardens in Kowloon Bay was sold for HK$6.15 million, or HK$16,400 per sq ft, 5 percent lower than the market price.


〈Macau Daily, June 7, 2019〉The governor of Guangdong province, Ma Xingrui, has announced that he is prepared to enforce plans to further open the economy of the province in order to counter the negative effects caused by the China-U.S. trade war.

Ma was speaking in Beijing during a press conference organized by the State Council on Monday, noting that Guangdong province has some contingency plans for the negative effects of the trade war that will certainly affect the southern province, a key manufacturing and hi-tech hub, Hong Kong’s South China Morning Post reported.

Although the governor acknowledged the likely losses from the continuation of the trade war process, he insisted that such losses would be manageable, pledging to further open up the province to cope with the challenges.

“Foreign trade makes up a significant part of Guangdong’s economy. Guangdong contributes about one-fifth of China- U.S. trade,” Ma said, adding, “It is inevitable that [the province] will be affected.”However, he said Guangdong, which has learned its lessons from the 2008 global financial crisis, has the tenacity to overcome the current difficulties.

“Having gone through the 2008 financial crisis, businesses in Guangdong have accumulated experience, and developed tenacity and risk control ability,” Ma remarked.

“We are confident that the overall situation will be controllable and [that] our economy will not fluctuate significantly,” Ma said. He refuted the accusations of his U.S. counterparts, namely regarding Huawei, saying, “The U.S. has, without reason, raised a lot of criticism […] and barred [U.S. suppliers] from supplying Huawei.”“I have told our American friends […] that we value the protection of intellectual property more than you do,” he added, noting that intellectual property rights were crucial in Guangdong’s efforts to develop its hi-tech sector and become an international hub for innovation.

〈HK Gov, June 6 , 2019〉A total of 4,890 flats in nine non-standard blocks of the Hong Kong Housing Authority (HA)'s four new public rental housing (PRH) estates are tentatively scheduled for completion between July and December 2019. Their rents will be set at the best rent levels in their respective districts.

The best rent for flats in the Urban District is $85.5 per square metre per month. This rate will apply to three PRH estates in Sham Shui Po including the 852 flats in one block in Hoi Tat Estate (North West Kowloon Reclamation Site 6, Phase 1), 2 030 flats in four blocks in Pak Tin Estate (Pak Tin, Phases 7 and 8) and 1 056 flats in two blocks in Shek Kip Mei Estate (Shek Kip Mei, Phase 6).

The best rent at $60.6 per square metre per month for the flats in Fanling District will apply to the 952 flats in two blocks in Fai Ming Estate (Fanling Area 49) in Fanling.

"Under this rent-fixing exercise, over 43 per cent of the flats are set at a rent level below $2,500 per month," a spokesman for the HA said today (June 6), adding that PRH rents, which are inclusive of rates, management fees and maintenance costs, are heavily subsidised.

〈The Standard, June 5, 2019〉Purchasers took possession of nearly 6,500 new units at 11 new property developments in the second quarter, significantly increasing flat supply in districts such as Kai Tak and Tsuen Wan.

Industry watchers noted that with the ample inventory of new homes, owners planning to lease out their properties are forced to be less aggressive in setting rental prices - leading to lower returns in some cases.

Among the 11 projects providing a total of 6,487 new units in the second quarter, CK Asset's (1113) Ocean Pride II Ocean Supreme in Tsuen Wan West accounted for 1,436 units - 22 percent of the new flat supply. Sun Hung Kai Properties' (0016) Cullinan West II in Nam Cheong Station contributed 1,188 units to the market, or 18 percent of the supply.

Among districts, Kai Tak contributed the most with 1,752 new units, adding to the 930 units previously supplied at mainland developer Poly Property's Vibe Centro.

Centaline Property senior sales manager Brian Chan Chi-yan said two rental transactions were just recorded at Vibe Centro, where an upper floor flat C of Block 1B, with a sellable area of 228 square feet, was leased out at HK$11,000 per month, or HK$48 per square foot. The owner bought the unit in 2017 for HK$4.89 million, so the rental return rate of 2.7 percent fell short of expectations.

Chan said there aren't too many flats available for rent in Vibe Centro, where asking rents hover around HK$10,000 monthly, with a price cut of about 10 percent after bargaining.

In April, K&K Property's Victoria Skye in Kai Tak recorded its first pre-leasing case involving a one-bedroom middle-floor flat N in Block 3, with a sellable area of about 330 sq ft, fetching HK$13,100 or HK$39.70 per sq ft per month.