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Monday 23 February 2009
Property sellers find buyers hard to come by as price gap proves hurdle
Sharp differences are emerging between buyers and sellers over the outlook for property in Hong Kong and the mainland, and the resulting big gap between their price expectations has applied the brakes to deals, say analysts.
Property sellers find buyers hard to come by as price gap proves hurdle
Sandy Li 23 February 2009
Sharp differences are emerging between buyers and sellers over the outlook for property in Hong Kong and the mainland, and the resulting big gap between their price expectations has applied the brakes to deals, say analysts.
While many bidders are on the prowl for bargains, vendors remain hopeful of more stimulus measures to prop up the ailing property market and a gradual rise in prices on the mainland appears to support their wait-and-see strategy.
Lee Wee Liat, a senior property analyst at investment bank Nomura, said developers in both Hong Kong and the mainland were now willing to sell only if their price expectations were met.
“However, closing deals now is very difficult as there is a huge gap in buyers’ offer prices and sellers’ asking prices,” Mr. Lee said.
According to sources, developer Shui On Land attempted to sell its luxury residential project Casa Lakeville in Shanghai’s upmarket Xintiandi district in an en-bloc deal to tap cash-rich property funds.
“But none of the purchase offers came close to meeting Shui On’s expectations,” the sources said.
Shui On is believed to have received purchase offers pitched at 50,000 yuan (HK$56,710) per square metre after it sold 118 units in the development in June last year at between 70,000 and 100,000 yuan per square metre.
The company holds more than 100 Casa Lakeville units.
Asked to comment, a company spokeswoman said: “We are open to all options either offering Casa Lakeville by en-bloc sale or by strata title. Prices will determine everything.”
Other developers have also been attracted to securing an en-bloc deal and according to Credit Suisse property analyst Raymond Cheng, Shimao Property has indicated a foreign investment fund has shown interest in buying a whole block in its Shanghai Shimao Rivera Garden.
Mr. Cheng noted in a recent report that the property could be worth 4 billion to 5 billion yuan.
Hutchison Whampoa Properties said last week that it had held discussions with a number of interested parties over the sale of its 2,300 square metre retail space in Gubei, Shanghai.
Mainland website Hexun.com earlier reported that Hutchison was asking for 150 million yuan.
Developer Guangzhou R&F Properties, which needs to raise up to 12 billion yuan to meet debt repayments in the second half, has reported that it is looking to sell the Grand Hyatt in Guangzhou for about 2 billion yuan.
On the buyers’ side, meanwhile, Goodwin Gaw, a co-founder of Gaw Capital, said his fund was in the market for assets.
“We are actively looking for acquisitions of completed commercial and hotel projects on the mainland. But asking prices are still too high,” said Mr. Gaw.
He forecast further declines in property prices by the end of the year.
Carlo Wu, a property analyst at DBS Vickers Securities, said that given the leverage constraints, purchasers were only interested in assets at distressed values.
Greg Penn, a senior managing director for Greater China investment properties at CB Richard Ellis, said larger transactions worth more than US$500 million would be difficult to do in today’s tight credit market.
The amount of foreign capital available for investment on the mainland both in debt and equity had fallen by about 80 per cent from the same time last year, Mr. Penn said.
“Large transactions will take a longer time to conclude this year,” he said.
However, the market could get a boost if Beijing approved the launch of real estate investment trusts in the latter part of the year, he said.
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Property sellers find buyers hard to come by as price gap proves hurdle
Sandy Li
23 February 2009
Sharp differences are emerging between buyers and sellers over the outlook for property in Hong Kong and the mainland, and the resulting big gap between their price expectations has applied the brakes to deals, say analysts.
While many bidders are on the prowl for bargains, vendors remain hopeful of more stimulus measures to prop up the ailing property market and a gradual rise in prices on the mainland appears to support their wait-and-see strategy.
Lee Wee Liat, a senior property analyst at investment bank Nomura, said developers in both Hong Kong and the mainland were now willing to sell only if their price expectations were met.
“However, closing deals now is very difficult as there is a huge gap in buyers’ offer prices and sellers’ asking prices,” Mr. Lee said.
According to sources, developer Shui On Land attempted to sell its luxury residential project Casa Lakeville in Shanghai’s upmarket Xintiandi district in an en-bloc deal to tap cash-rich property funds.
“But none of the purchase offers came close to meeting Shui On’s expectations,” the sources said.
Shui On is believed to have received purchase offers pitched at 50,000 yuan (HK$56,710) per square metre after it sold 118 units in the development in June last year at between 70,000 and 100,000 yuan per square metre.
The company holds more than 100 Casa Lakeville units.
Asked to comment, a company spokeswoman said: “We are open to all options either offering Casa Lakeville by en-bloc sale or by strata title. Prices will determine everything.”
Other developers have also been attracted to securing an en-bloc deal and according to Credit Suisse property analyst Raymond Cheng, Shimao Property has indicated a foreign investment fund has shown interest in buying a whole block in its Shanghai Shimao Rivera Garden.
Mr. Cheng noted in a recent report that the property could be worth 4 billion to 5 billion yuan.
Hutchison Whampoa Properties said last week that it had held discussions with a number of interested parties over the sale of its 2,300 square metre retail space in Gubei, Shanghai.
Mainland website Hexun.com earlier reported that Hutchison was asking for 150 million yuan.
Developer Guangzhou R&F Properties, which needs to raise up to 12 billion yuan to meet debt repayments in the second half, has reported that it is looking to sell the Grand Hyatt in Guangzhou for about 2 billion yuan.
On the buyers’ side, meanwhile, Goodwin Gaw, a co-founder of Gaw Capital, said his fund was in the market for assets.
“We are actively looking for acquisitions of completed commercial and hotel projects on the mainland. But asking prices are still too high,” said Mr. Gaw.
He forecast further declines in property prices by the end of the year.
Carlo Wu, a property analyst at DBS Vickers Securities, said that given the leverage constraints, purchasers were only interested in assets at distressed values.
Greg Penn, a senior managing director for Greater China investment properties at CB Richard Ellis, said larger transactions worth more than US$500 million would be difficult to do in today’s tight credit market.
The amount of foreign capital available for investment on the mainland both in debt and equity had fallen by about 80 per cent from the same time last year, Mr. Penn said.
“Large transactions will take a longer time to conclude this year,” he said.
However, the market could get a boost if Beijing approved the launch of real estate investment trusts in the latter part of the year, he said.
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