HK - Housing 04 (Apr 16 - Jun 24)

[winston]

Double Whammy Slams Hong Kong Developers

by Kana Nishizawa

Fed rate hike expectations, stamp duties spur stock declines
Sun Hung Kai, New World among biggest decliners in November

One bright spot for developers may be the weakening yuan, which sank to an eight-year low against the dollar last month. Hong Kong will continue to look attractive for mainland investors searching trying to shift to foreign-denominated assets, countering the higher stamp duty, according to Natixis.

The recent declines in Hong Kong developers’ shares are an opportunity to accumulate because the stamp duty will impact the secondary market more than developers, according to Daiwa Capital Markets Hong Kong Ltd. They’re also relatively cheap compared to the broader market.

The five biggest developers trade at an average 9.3 times reported earnings, almost 30 percent less than the Hang Seng Index, according to data compiled by Bloomberg.

Source: Bloomberg

https://www.bloomberg.com/news/articles ... ly-fizzles

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JPM is bearish on Hong Kong property developers, within a weak macro-economic environment.

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Government’s ambitious 2030 land reclamation plan to cost HK$400 billion, group says

Cost of East Lantau Metropolis project came under question at first public forum on Saturday

by Shirley Zhao

The government’s grand long-term blueprint for Hong Kong, which envisions a 1,000-hectare man-made island in the middle of the sea, could cost over HK$400 billion, a concern group estimated.

The estimate for the East Lantau Metropolis (ELM) project was raised Saturday at the first public forum on the 2030 Plus blueprint.

The proposed ELM – the size of about four Cheung Chau islands to be located east of Lantau – was included in the 2030 Plus long-term planning blueprint. It is one of two major new towns the government hopes will resolve a projected shortfall of 1,200 hectares of land for housing and economic development.

Source: SCMP

http://www.scmp.com/news/hong-kong/heal ... ation-plan

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Home prices tipped to fall 15pc

by Koey Yip

Citibank has predicted home prices will fall by 15 percent next year.

Director Adrienne Lui Chi-ngan said Citibank also expects prices in the luxury housing segment to drop by 10 percent even as the SAR's economy will grow by 1.7 percent from 1.5 percent this year.

She said the volume of sale and purchase deals fell immediately after the recent announcement of additional cooling measures that crimped demand.

The average transaction volume may drop to about 3,000 a month, she said.

Prices will likely stabilize in March 2018 because of inadequate supply and mainland capital inflows, Lui said.

Meanwhile, Kerry Properties (0683) put on the market another 149 flats of its Mantin Heights project in Ho Man Tin for HK$11.22 million to HK$57.31 million. They will be offered for sale on Saturday at the soonest.

Executive director Chu Ip pui said that before the government recently announced more curbs, first-time homebuyers snapped up just 25 percent of a batch of Mantin Heights flats.

Following the move, sales of a subsequent batch rose to 50 percent.

Going forward, volume may be adversely affected by the latest curbs, but not price levels, Chu said.

Separately, Sun Hung Kai Properties (0016) said it is awaiting presale approval for the second phase of its Grand Yoho project in Yuen Long.

Deputy managing director Victor Lui Ting said SHKP expects sales to begin by the end of this month.

Some completed flats may be offered for sale after the Lunar New Year. Lui said he expects home prices to remain stable and volumes to rise early next year.

Meanwhile, Hanison Construction (0896) director Matthew Chow Ka- fung said it raised the price of a special flat at The Grampian by 17 percent to HK$140 million.

Source: The Standard

http://www.thestandard.com.hk/section-n ... ?id=177203

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<Research Report>Citi Forecast on HK Home Mkt This Year (Table)

Citigroup, in its report, listed the forecast on Hong Kong property market for 2016 and 2017:

Categories/ 2016/ 2017
Overall residential price/ +7%/ -15%
Luxury residential price/ +7%/ -10%
Office rentals / Core district/ +5%/ -5%
Office rentals / non-Central/ +3%/ -5% to -10%
Retail rentals / Prime/ -5%/ Flat
Retail rentals / Suburban/ +3%/ +3%

Source: AAStocks Financial News

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<Research Report>Citi Expects 2017 HK Home Prices to Fall 15%; Developers Continue to Underperform

Citigroup, in its report, estimated Hong Kong retail sales to bottom out in the first half of this year, thus raised WHARF HOLDINGS (00004.HK) rating from Sell to Buy with target price raised from $41.4 to $65.8; while HYSAN DEV (00014.HK) was upgraded from Sell to Neutral with target price lifted from $31.6 to $34.1.

The research house was bullish on retail landlords for property developers with industry top picks of Wharf and LINK REIT (00823.HK).

The research house predicted that the prices of residential properties in Hong Kong will recede from the nearly high level. It was estimated that overall residential property prices will fall by 15% this year and those of luxury residential properties will fall by 10%.

HANG LUNG PPT (00101.HK), Hongkong Land and KERRY PPT (00683.HK) were industry top picks for Sell of the research house.

In addition, Citigroup adjusted the target prices for developers. The new target price of SHK PPT (00016.HK) was revised down from $116.6 to $100.7 with rating maintained at Neutral; and CK PROPERTY (01113.HK) target price was revised down from $49.7 to $40.9 with rating kept at Sell.

Source: AAStocks Financial News

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Former HSBC Exec Edwin Lau: HK Home Mkt to Explode within 18 Months; Decline to Last 3 Decades

Writing on Facebook, former assistant general manager at HSBC Edwin Lau expected the local home market to "explode" in 12-18 months.

The case might be like that in Japan - a backwater economy after 2 or 3 decades after explosion. Therefore he urged Hong Kong people to deal with that as soon as possible.

Lau said that QE policy in US, government's land policy and PRC funds influx have boosted the home prices in Hong Kong irrationally for 16 years.

He believed that the home prices now would have structural changes. Government policy, ageing population, falling income, slowing economy, drying HKD, higher inflation, rising rates, new US administration, trade protectionism, potential conflicts between the US and China are factors that have changed the macro-environment of the home market, Lau said.

Source: AAStocks Financial News

[winston]

Hong Kong realtors unveil ‘zero down payment’ home lending scheme

Midland Holdings will lend up to 130 per cent of the value of a flat, up to a maximum of HK$20 million, through financial institutions

New flat supply would climb to a 12-year high this year with more than 33,891 units in the sales pipeline.

Customers of mReferral will receive a 30-year financing loan of up to 130 per cent of the flat’s value, much higher than the standard bank mortgage ceiling of 60 per cent for flats below HK$10 million, and 50 per cent for those more than HK$10 million.

Source: SCMP

http://www.scmp.com/property/article/20 ... ing-scheme

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<Research Report>JPM: Developers May Rebound in Near Term; Top Pick for Large Cap CK PROPERTY

JPMorgan, in its report, said although the share prices of Hong Kong developers underperformed in 4Q16, they should rebound in a short term on the back of stronger-than-expected pricing power in the primary market;

Close to 3,900 units to be launched in the near term; and moderate interest rate risk in the near term.

JPMorgan's large cap pick is CK PROPERTY (01113.HK). However, the broker believed this is merely a trading opportunity so it is hard to see a sustainable long-term re-rating due to the unsustainably high level of residential prices, developers' declining return profile and their inactive capital management.

JPMorgan said Hong Kong property developers underperformed the HSI by about 8% in 4Q16, due to the new "spicy measures" by the government; the rate hike in the US; and the rise in HIBOR.

There should be short-term upward momentum of their share prices on the back of the recovery in primary transaction volume.

Source: AAStocks Financial News

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