〈China Daily, Jan 1, 2022〉 China’s property sector is not out of woods with new year, despite Beijing’s change of stance, with analysts warning of maturing debts, falling home sales and tax worries
Last year was no doubt difficult for Chinese developers and the pain could get worse in the new year for companies, homebuyers and investors alike. A liquidity crunch amid slowing home sales is likely to dominate sentiment.
China Evergrande, Kaisa Group, Fantasia Holdings and Modern Land (China) all made headlines in 2021 over their failure to repay onshore and foreign creditors.
Beijing’s "three red lines" policy, which set the debt thresholds for the real estate sector, limited highly leveraged developers’ access to new funds.
The policy has been widely cited as the reason for the situation developers now find themselves in.
Stock investors lost more than US$90 billion in market value from their holdings in property stocks in Shenzhen, Shanghai and Hong Kong bourses last year, according to Bloomberg data.
The MSCI China Real Estate Index, which tracks 53 developers, sank 36 per cent in 2021, erasing US$126 billion in value.
〈China Daily, Jan 1, 2022〉Hong Kong's notoriously tiny flats are likely to endure and withstand the minimum size ordered by the city’s authorities, as affordability remains the biggest challenge for many first-home buyers struggling to get on the rung of the property ladder.
The 280 sq ft minimum stipulated this week on new projects built on government land would wipe out many flats priced below HK$6 million, which are eligible for up to 90 per cent mortgages, pushing affordability further beyond the reach for many.
The minimum size will also be a hindrance in land-scarce areas such as Hong Kong Island, pushing developers and buyers alike to venture to the New Territories for larger homes.
"In the New Territories, it is fair to set a minimum size of 280 sq ft for flats, but it becomes less affordable in urban areas where homes are priced at HK$30,000 to HK$40,000 per square foot," said David Chiu, chairman of Far East Consortium International, which has built three micro flat projects of between 198 and 404 sq ft in Wong Tai Sin, Cheung Sha Wan and Tai Wai. Chiu supports the government’s minimum.
〈The Standard, Dec 31, 2021〉Shares of China Evergrande (3333) tumbled on unpaid interest yesterday as a government official said mergers and acquisitions will help Chinese property firms lower their debt.
The embattled developer slumped 9 percent after it did not pay offshore coupons due earlier this week.
Evergrande, whose US$19 billion (HK$148.2 billion) in international bonds are in cross-default after missing a deadline to pay coupons earlier this month, had new coupon payments worth US$255 million due on Tuesday for its June 2023 and 2025 notes.
Some bondholders holding the two bonds have not yet received the coupons, according to three sources with knowledge of the matter. Both the payments have a 30-day grace period.
This came as, Zou Lan, the head of financial markets at the People's Bank of China, said mergers and acquisitions in the Chinese property market will help firms lower their debt.
"Mergers and acquisitions of projects between real estate companies are the most effective market-oriented means for real estate companies to resolve risks," Zou told reporters.
〈Asian Post, Dec 30, 2021〉New World tycoon’s wife buys luxury flat as wealthy channel their capital into property.
The wife of Henry Cheng Kar-shun,Hong Kong's third-richest man, has bought a flat on The Peak for HK$450 million, as the city’s wealthiest residents continue to channel their capital into bricks and mortar to protect their wealth.
Katherine Ip Mei-hing bought the four-bedroom, 4,256 sq ft home at 8 Peak Road from CSI Properties and Phoenix Property Investor last month, according to sources familiar with the deal.
The price translates to HK$105,535 per square foot, a record at the luxury residential project, of which 65 per cent is held by CSI Properties and Phoenix Property.
"Rich families from Hong Kong and the mainland love to buy properties on The Peak because of the rare supply. Given the recent volatility in stock markets, many clients prefer to invest in luxury homes at prestigious locations that are more resilient to dramatic changes in market conditions," said Sammy Po, chief executive at Midland Realty.
〈Asian Post, Dec 29, 2021〉
Private home prices in Hong Kong declined for two consecutive months by 1.2 percent in November from October, the lowest in seven months after reaching a record high in September, according to government data.
Meanwhile, the Hong Kong Monetary Authority said it is considering that money will not be kept by law firms anymore for home sales in the secondary market. This came after the shutdown of Wong, Fung & Co, a law firm specializing in property transactions, which led to over HK$100 million being frozen in the firm's bank account in January.
In the secondary market secretary for food and health Sophia Chan Siu-chee bought a 906-square-foot two-bedroom apartment at Baguio Villa in Pok Fu Lam, South District in November, for HK$17.8 million. Chan had to pay a 15 percent double stamp duty of HK$2.67 million since she holds multiple properties inHong Kong and the United Kingdom.
This came as the family of former Ocean Grand Holdings (1220) founder Michael Yip Kim-po sold a unit at Leighton Hill in Happy Valley for HK$169 million this month, which earned them a fourfold gain of HK$137.7 million.