HK - Housing 01 (May 08 - Aug 11)

[winston]

Hong Kong's Luxury Home Prices May Drop 30% in 2009, CLSA Says
By Kelvin Wong

Sept. 23 (Bloomberg) -- Hong Kong's luxury home prices, having doubled in under five years, may drop as much as 30 percent in 2009 as the credit crunch cools the city's economy, according to CLSA Asia-Pacific Markets.

``Potential buyers' outlook on the market is very skeptical,'' Nicole Wong, head of Hong Kong and China property research at the Credit Agricole SA unit, said at a briefing in Hong Kong today. Prices for mainstream residencies may fall about 20 percent next year, she added.

The impact of credit-market losses may be spreading to Hong Kong, with the threat of a global economic slowdown and a slump in the stock market curbing demand for properties and causing potential buyers to expect cheaper prices. The value of Hong Kong home transactions fell 60 percent to the lowest in more than two years in August.

Still, the decline is likely to be less severe than that seen in 1997 because homeowners and developers aren't borrowing as much, Wong said.

Hong Kong home values peaked in the second quarter of 1997 before crashing in the Asian financial crisis, leaving many homes worth less then their mortgages for years. The 2000 dot- com bubble burst, the Sept. 11, 2001, terrorist attacks and the 2003 SARS epidemic caused prices to fall as much as 70 percent from the peak. The rebound started in late 2003.

The Hong Kong government defines luxury homes as apartment and houses with an area of more than 1,000 square-feet.

[winston]

STOCK ALERT - HK property developers slump on continued demand worries

HONG KONG (XFN-ASIA) - Property developers' shares were sharply lower, extending recent weakness, on continued worries over slumping housing demand.

At 11:16 am, Sun Hung Kai Properties was down 4.95 hkd or 6.3 pct at 73.45, Henderson Land was down 1.7 hkd or 5 pct at 32.3, Sino Land was down 0.43 hkd or 5.1 pct at 8.07, and Cheung Kong was down 1.75 hkd or 2.0 pct at 84.5.

Dealers said the new round of mortgage rate hikes by local banks has further dampened sentiment on the local property market, which has been in a slump for several months.

According to an estimate by Centaline Property Agency Ltd, one of the two main local real estate brokers, housing transactions in the third quarter totaled just 22,700, the least since the first quarter of 2006.

Dominant local mortgage lenders HSBC and BOC Hong Kong, as well as smaller player ICBC (Asia), raised their rates this week, citing an increase in interbank lending costs.

[winston]

Property prices set for 20pc fall
Alfred Liu

Property prices are expected to decline by up to 20 percent by the end of next year amid global financial turmoil and rising mortgage rates.

"Prices in the mass residential market will drop by 15 to 20 percent [by the end of next year], although affordability is still strong," Simon Smith, deputy managing director at Savills Valuation and Professional Services, said yesterday.

He said prices in the luxury residential market could fall 25 to 30 percent during the period.

"Continued integration with China has alleviated the impact of a slowing economy, the credit crunch, and high inflation on Hong Kong," said David Tse Kin-wah, Hong Kong board chairman of the Royal Institution of Chartered Surveyors, "but scarce supply of developable land in urban areas and the constant inflow of investors' funds into Hong Kong Kong help stabilize the downward trend of residential prices."

Citi analyst Tony Tsang said in a note: "The latest hikes in mortgage interest rates and declines in property rentals have made us more bearish on Hong Kong property. The downward spiral in the property market will continue, in our view, and corrections will likely overshoot on the downside."

Under tightening measures, "[prices] in the mainland property market will drop 20 to 30 percent by the end of next year ... particularly in first-tier cities," Smith said.

But he also expects prices to recover as the government will likely implement policies to stabilize the market once it has fallen too much. "They will be careful to support the market," he said.

[winston]

WEN WEI PO

-- Hong Kong's secondary market property prices have dropped for 16 consecutive weeks for an accumulated decline of 12.7 percent, according to real estate agency Ricacorp.

[winston]

Hong Kong New Home Sales to Drop to 12-Year Low, Centaline Says By Kelvin Wong

Oct. 14 (Bloomberg) -- Hong Kong's 2008 new-apartment sales may drop to the lowest since records were first kept in 1996, according to Centaline Property Agency Ltd., as the credit crunch filters through to Asia.

The number of transactions may fall 42 percent to 11,000 this year from 18,943 in 2007, Wong Leung-sing, an associate director at Centaline, one of Hong Kong's largest residential real estate agencies, said in an e-mailed statement. The value of transactions may drop to HK$90 billion ($11.6 billion), down 27 percent from last year, he said.

``Developers are very cautious about putting new apartments on the market now,'' Wong said in an interview. ``The stock market slump is of course one reason. They are also worried because of the lack of new stock.''

The Hang Seng Property Index, which tracks the city's six biggest developers by market value, fell 34 percent in the past month on concern the global credit crisis may weaken homebuyer confidence. The city's home prices may drop between 20 percent and 30 percent next year, according to a report by CLSA Asia- Pacific Markets last week.

Home sales in Hong Kong fell for a third straight month in September, dropping 22 percent to HK$18.7 billion, after dropping 59 percent in August, according to Land Registry figures released last week.

The number of residential units that changed hands in the city last month fell 31 percent from a year earlier to 6,075, according to the figures. The 43 percent drop in the benchmark Hang Seng Index this year may affect the luxury-housing market, Credit Suisse Group AG wrote in a report last week.

Recession Concerns

Hong Kong Financial Secretary John Tsang said yesterday the city faces an increased risk of a recession in 2009 because of the global financial crisis.

The city slashed its key interest rate by 1.5 percentage points last week after economic growth slowed and the global credit freeze pushed up inter-bank lending rates. Hong Kong's economy expanded 4.2 percent in the second quarter from a year earlier, the slowest pace in almost five years.

The city government is one of Hong Kong's largest suppliers of unoccupied land. Developers trigger auctions from a list of available building sites by promising to pay a minimum amount for the land.

No major residential site has been sold so far this financial year that started on April 1, according to the Lands Department. The last time the government sold a residential site for more than HK$1 billion was Oct. 15 last year.

New Supply

Hong Kong's developers typically begin selling apartments while they're still in construction and book profits only upon completion.

The supply of new apartments, meaning those that have been built but not yet sold, is at a record low in Hong Kong at the moment, UBS AG analyst Eric Wong told reporters at a briefing last month. Apartment completion reached the lowest in 36 years in 2007, Wong said.

New apartment stocks as of June this year fell 46 percent to 4,608 compared a year earlier, according to figures compiled by Midland Holdings Ltd., Hong Kong's biggest publicly traded real estate agency.

Hong Kong home prices are among the highest in the world. Sun Hung Kai Properties Ltd., the city's biggest builder, in June sold a house in the luxury Peak district for an Asian record HK$57,000 per square foot, Sing Tao Daily reported.

Third Quarter

Third-quarter new home sales reached 1,231 with a value of HK$9.76 billion, both the second-lowest on record, Centaline's Wong said.

Projects that began sales in the third quarter included Pacific Century Premium Developments Ltd.'s One Pacific Heights, Kerry Properties Ltd.'s Soho 38 and Henderson Land Development Co.'s The Sparkle.

Fourth-quarter new home sales may rise 2,500 as ``developers aiming to meet annual sales target will become more aggressive in selling new flats,'' Wong said.

Billionaire Li Ka-shing'sCheung Kong Holdings Ltd., Sino Land Co. and MTR Corp. are among developers that may launch new projects on to the market in the fourth quarter, he said.

[winston]

Crisis slows property transactions in secondary market
Alfred Liu

Sentiment in the residential property sector remains weak and transactions in the secondary market are expected to fall by as much as 10 percent in the wake of the financial crisis.

Hong Kong Property Services said that as of October 16, monthly transactions in the secondary market had fallen 16 percent from the previous month to 2,339 deals. "The market adjustment is expected to continue in the short term and transactions in the secondary market this month will fall below 5,000, a drop of 8 percent from last month," said executive director Richard Lee Chi-shing.

Centaline Property Agency associate director for research Wong Leung-sing expects transactions in the secondary market to fall 10.4 percent in October to around 4,000, from 4,466 last month, marking a 34-month low.

There were 23 deals in 10 of the largest housing estates over the weekend, up from 19 over the previous weekend, according to Midland Realty. "The government's policy not to sell land way below market price and limited supply of new flats can stabilize the market," said sales director Gary Yeung Wing-kin.

Centaline said a 1,137-square-foot apartment at Taikoo Shing in Hong Kong Island East sold for HK$6 million, or HK$5,277 per square foot, the lowest there since the SARS period of 2003.

Hong Kong Property Services said about 40 percent of flat owners at Laguna Verde, in Hung Hom, were willing to cut prices by between 5 and 15 percent.

The real estate agent sold a 1,148 sqft unit at the development for HK$6.95 million, or HK$6,054 psf. This, it said, was more than 10 percent lower than the prevailing market value.

Meanwhile, Sino Land (0083) recorded nearly 90 transactions averaging HK$6,200 psf at The Dynasty development in Tsuen Wan during its October 7 launch. The developer said the project's show flats attracted more than 10,000 people over the weekend, bringing total visitors to more than 70,000.

[winston]

Even property prices cannot be sustained. An agent told Dr Check that a short-term speculator who bought a HK$13 million apartment in Mid-Levels two months ago, was offered HK$9.5 million last week.

This week the prospective buyer reduced his offer to HK$8.5 million - a cool HK$1 million less in just seven days!

[winston]

MING PAO DAILY NEWS

-- Low per-sq-ft prices among major estates show speculators are now dumping their flats in holding for cash. Such transactions, some with price drops as much as 20 percent, have been reported in various districts

[winston]

TA KUNG PAO

-- Top luxurious mansions at The Peak traded with record prices are dropping to previous levels. A prime estate developed by Sun Hung Kai Properties has dropped back to the pre-surge price level two years ago within six months.

[winston]

MING PAO DAILY NEWS

-- Sources say some major lenders have indicated that mortgage loans for more than HK$20 million now require deposits of more than the industry maximum of 30 percent. The move is expected to have a direct hit on the luxury market, which recorded zero case in the first hand market last month.