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Thursday, 27 November 2008
Cheung Kong Property Boss Sees No Need to Slash HK Prices
Cheung Kong (Holdings), Asia’s top property developer by market value, said its Hong Kong flat sales so far this year stood at a record high of US$3.6 billion and a limited supply of new flats should keep recent price falls in check.
Cheung Kong Property Boss Sees No Need to Slash HK Prices
Reuters in Hong Kong 27 November 2008
Cheung Kong (Holdings), Asia’s top property developer by market value, said its Hong Kong flat sales so far this year stood at a record high of US$3.6 billion and a limited supply of new flats should keep recent price falls in check.
Local developers were financially sound and there was no need for them to slash prices to boost sales, Justin Chiu Kwok-hung, an executive director and a head of property at Cheung Kong said on Thursday.
Mr. Chiu shrugged off analysts’ forecasts of a further slide in Hong Kong property prices next year, but said mainland’s property market would probably take some time to digest excessive supply.
“A slight [downward] adjustment may be seen in Hong Kong, but the overall primary market is seen to be steady [for next year],” Mr. Chiu, known as a property rock star for the colourful costumes he uses to promote Cheung Kong’s flat sales, said at the company’s headquarters.
A slowdown in mainland property prices may continue into early next year, but Beijing’s measures to buoy the domestic economy would support the fragile real estate market, he said.
“We should see light at end of the tunnel in the second half [of next year],” he said, adding the group would focus on first and second tier cities on the mainland, such as Beijing, Shanghai, Chengdu and Shenyang.
The group had recently sold all 150 units in the first batch of an upmarket luxury development in Beijing, generating 1 billion yuan (HK$1.13 billion), and would put a second batch of up to 200 units up for sale early next year, Mr. Chiu said.
In Hong Kong, a limited supply of about 10,000 new homes every year was far less than the market’s need of about 20,000 units, which would support prices, he said.
Adrian Ngan, an analyst at CCB International Securities, agreed, provided local economic conditions don’t deteriorate substantially.
“A softer interest rate environment next year may give support to the property market as well,” Mr. Ngan said, adding he expected to see a recovery in local property prices in the second half of next year after a consolidation in the first half.
Cheung Kong had generated a record HK$28 billion from the sale of 3,000 units so far this year, mostly in the first half, and no major flat sales were scheduled for the rest of the year, Chiu said.
The sales represent a 65 per cent increase from about HK$17 billion for the whole of last year and Mr. Chiu said the sales far exceeded the company’s initial target of HK$22 billion set earlier this year.
He declined to give a sales target for next year, saying only, the company “may not be able to repeat the same record next year”, although it had no plans to slow development or its flat sales programme despite the global financial crisis.
Hong Kong residential property prices, which have already fallen 15 per cent from a peak earlier this year, are expected to drop by 20 per cent next year due to the global economic downturn, according to a Reuters poll last week.
JP Morgan said this month that it expected residential property prices to fall 35 per cent by mid-next year from the peak in the second quarter of this year.
It also expects Hong Kong developers to post an earnings decline by up to 17 per cent next year and has lowered its next year EPS estimates on Cheung Kong by 29 per cent to HK$6.95.
Mr. Chiu said Cheung Kong had locked in 70 per cent of development profit for next year through the sales of Capitol and Celestial Heights at the peak of the market this year.
Shares of Cheung Kong, the property flagship of tycoon Li Ka-shing, have lost more than half of their value this year, in line with the benchmark index, as an escalating financial crisis dampened the housing market.
But it outperformed a 65 per cent drop in rival Sun Hung Kai Properties, which surpassed Japan’s Mitsubishi Estate and Westfield Group listed in Australia in terms of market value.
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Cheung Kong Property Boss Sees No Need to Slash HK Prices
Reuters in Hong Kong
27 November 2008
Cheung Kong (Holdings), Asia’s top property developer by market value, said its Hong Kong flat sales so far this year stood at a record high of US$3.6 billion and a limited supply of new flats should keep recent price falls in check.
Local developers were financially sound and there was no need for them to slash prices to boost sales, Justin Chiu Kwok-hung, an executive director and a head of property at Cheung Kong said on Thursday.
Mr. Chiu shrugged off analysts’ forecasts of a further slide in Hong Kong property prices next year, but said mainland’s property market would probably take some time to digest excessive supply.
“A slight [downward] adjustment may be seen in Hong Kong, but the overall primary market is seen to be steady [for next year],” Mr. Chiu, known as a property rock star for the colourful costumes he uses to promote Cheung Kong’s flat sales, said at the company’s headquarters.
A slowdown in mainland property prices may continue into early next year, but Beijing’s measures to buoy the domestic economy would support the fragile real estate market, he said.
“We should see light at end of the tunnel in the second half [of next year],” he said, adding the group would focus on first and second tier cities on the mainland, such as Beijing, Shanghai, Chengdu and Shenyang.
The group had recently sold all 150 units in the first batch of an upmarket luxury development in Beijing, generating 1 billion yuan (HK$1.13 billion), and would put a second batch of up to 200 units up for sale early next year, Mr. Chiu said.
In Hong Kong, a limited supply of about 10,000 new homes every year was far less than the market’s need of about 20,000 units, which would support prices, he said.
Adrian Ngan, an analyst at CCB International Securities, agreed, provided local economic conditions don’t deteriorate substantially.
“A softer interest rate environment next year may give support to the property market as well,” Mr. Ngan said, adding he expected to see a recovery in local property prices in the second half of next year after a consolidation in the first half.
Cheung Kong had generated a record HK$28 billion from the sale of 3,000 units so far this year, mostly in the first half, and no major flat sales were scheduled for the rest of the year, Chiu said.
The sales represent a 65 per cent increase from about HK$17 billion for the whole of last year and Mr. Chiu said the sales far exceeded the company’s initial target of HK$22 billion set earlier this year.
He declined to give a sales target for next year, saying only, the company “may not be able to repeat the same record next year”, although it had no plans to slow development or its flat sales programme despite the global financial crisis.
Hong Kong residential property prices, which have already fallen 15 per cent from a peak earlier this year, are expected to drop by 20 per cent next year due to the global economic downturn, according to a Reuters poll last week.
JP Morgan said this month that it expected residential property prices to fall 35 per cent by mid-next year from the peak in the second quarter of this year.
It also expects Hong Kong developers to post an earnings decline by up to 17 per cent next year and has lowered its next year EPS estimates on Cheung Kong by 29 per cent to HK$6.95.
Mr. Chiu said Cheung Kong had locked in 70 per cent of development profit for next year through the sales of Capitol and Celestial Heights at the peak of the market this year.
Shares of Cheung Kong, the property flagship of tycoon Li Ka-shing, have lost more than half of their value this year, in line with the benchmark index, as an escalating financial crisis dampened the housing market.
But it outperformed a 65 per cent drop in rival Sun Hung Kai Properties, which surpassed Japan’s Mitsubishi Estate and Westfield Group listed in Australia in terms of market value.
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