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Property News Weekly Digest
2021/12/11
〈China Daily, Dec 11, 2021〉Mainland firms once edged out Hong Kong peers for prime land in the city, but a Beijing clampdown has since forced them to put assets on the market

Lui Che-woo, one of Hong Kong’s wealthiest men with a casino, hotels and flats under his belt, met his match in late 2016 when his company, K Wah International, lost a bidding war to a mainland airline that was on a land grab in the city.

HNA Group, a conglomerate built around Hainan Airlines, paid a record HK$8.84 billion for a residential land plot at Hong Kong’s former Kai Tak airport, a sum that was substantially over the market’s valuation.

It was the opening salvo in a HK$27.22 billion shopping spree over four months that ended with HNA owning four parcels of prime land, each setting a fresh price record.

"Mainland companies have the ability to do it, but we don’t," Lui said in a November 2016 interview with the Financial Times, adding that the flood of money from Hong Kong’s northern border was "distorting" land prices in the city.

Lui, Asia’s second-richest man in 2016 according to Fortune, with his wealth estimated at US$8 billion, was not alone in feeling the threat of mainland developers, whose deep pockets were lined by cheap – and sometimes unauthorised – financing.

〈China Daily, Dec 10, 2021〉The People's Bank of China, the central bank, will continue to support the Hong Kong Special Administration Region's development as an international financial center, its governor said on Thursday.

Measures in that direction are mainly for optimizing the financial market connect mechanism between the Chinese mainland and the SAR, as well as developing RMB-denominated financial products and tools, said PBOC Governor Yi Gang in a seminar.

The SAR can play a role in connecting the mainland and international financial markets, and authorities will further improve the connect programs, which channel funds between the mainland and the SAR to better satisfy investor needs, Yi said.

Multiple efforts will help strengthen Hong Kong's status as an international financial center, he said.

The seminar, entitled "Hong Kong's Position and Prospect as an International Financial Center", was jointly held by the PBOC and the Hong Kong Monetary Authority in Beijing on Thursday.

According to data from the PBOC, more than half of all the listed firms in Hong Kong are from the mainland, contributing more than 80 percent of the local market capitalization. Under the Securities Connect program, about 70 percent of the A shares held by international investors are traded in Hong Kong.

〈Macau Daily Times, Dec 9, 2021〉FINANCIAL markets can cope with the impact of a Chinese real estate developer that is struggling to avoid defaulting on $310 billion in debt, the central bank governor said yesterday, in a new effort to assure the public the economy can be shielded from fallout.

Yi Gang's comments by video to a seminar in Hong Kong added to indications Beijing has no plans to bail out Evergrande Group. Fears of a default have rattled financial markets, but economists say the ruling Communist Party wants to avoid sending the wrong signal at a time when it is trying to force companies to cut high debt burdens.

"The short-term risks of individual real estate companies will not affect the normal financing function of the medium- and long-term market," Yi said, according to Chinese news outlets.

"Evergrande's hazard is a market event that will be properly handled in accordance with market principles and law," Yi said. Investors' interests"will be protected in accordance with the law."

Default is all but certain after Evergrande, the global real estate industry's most- indebted company, warned Friday it might run out of cash. The company says it has 2.3 trillion yuan ($350 billion) of assets but it is struggling to sell them fast enough to pay its debts.

〈Asian Post, Dec 9, 2021〉Fitch places embattled mainland developers under ‘restricted default’ after their failure to meet payment obligations on their bonds by deadline

Embattled property developers China Evergrande Group and Kaisa Group Holdings have been downgraded to "restricted default" by international rating agency Fitch Ratings.

Yesterday’s downgrade came after several attempts by Evergrande, the world’s most indebted developer, to stave off such an event through last- minute bond payments a couple of times over the past two months.

Fitch said Kais had reportedly failed to make payments on its US dollar-denominated bonds due on December 7 and had not responded to requests for comment.

A restricted default, a grade higher than a default in Fitch’s definition, means that a company has a payment default but has not entered into bankruptcy filings, liquidation or other formal winding-up procedures.

Fitch placed downgraded Modern Land (China) under restricted default after it missed the payment on the dollar bonds in October.

Fantasia Group Holdings was also downgraded after the developer failed to repay its US$206 million senior notes the same month.

〈Asian Post, Dec 8, 2021〉A limited supply of car parking spaces in Hong Kong, coupled with the removal of double stamp duty, has whetted investors’ appetite for this segment of the property market, and turnover could reach an all-time high this year.

A total of 9,600 parking spaces in the city are expected to change hands this year with the value topping HK$18.5 billion, erasing the previous record of HK$16.6 billion in 2018, according to a research note by Centaline Property Agency.

The number of deals will also be the highest since 2015 when 10,016 transactions were conducted, but will fall short of the record 12,628 transactions in 2012.

The number is also estimated to be 70 per cent higher than last year’s 5,658, while the value is expected to increase by 76 per cent from HK$10.5 billion.

"The figures show car parking spaces are surrounded by strong buying interest, and investors are very keen to own them," Wong Leung-sing, senior associate director of research at Centaline, wrote in the report.