HK - Housing 01 (May 08 - Aug 11)

HK - Housing 01 (May 08 - Aug 11)

Postby winston » Tue May 20, 2008 4:58 pm

From UOB-Kay Hian:-

Property

Limited upside to residential prices


After declining for more than three months, we expect residential activities will pick up this month, as developers’ promotional efforts on new launches have helped to lift market sentiment somewhat. Despite the falling volume, residential prices have only dropped 2% from the recent peak, supported by the negative rate and rising rental.

But given the uncertain economic situation overseas, we do not see much upside from the current level. Given this opinion, we recommend the laggards: New World Development (17 HK /BUY / Target: HK$26.09), Henderson Land (12 HK/BUY/HK$73.69) and Kerry Properties (683 HK/BUY / Target: HK$65.16).

Market activities picking up after four months of decline. Transaction volume fell further in April (which reflected slower residential activities in March), down 6% mom to 9,156, the third consecutive month of declining sales. Up to 16 May, 3,920 transactions were recorded, hence it is likely that May will be another slow month.

However, a couple of new launches has brought attention back to the market, we expect sales activities to pick up this month but the numbers will be reflected in the June figure.

Better-than-expected presale of The Palazzo. Admittedly, Sino Land’s presale of The Palazzo (Shatin), with 800 of the total 1,375 units sold within two weeks for an average price of HK$9,000psf, were ahead of our expectations both in terms of volume and prices. But that has not changed our view on the residential sector – that prices are close to the peak this year, if they have not already reached there yet.

Another surprise was that investment demand for luxury units remains strong. Taken into account the age gap of the projects, The Palazzo is about 20% more expensive than the nearby Royal Ascot. We consider this as fair difference.

Watch out for Celestial Heights. The next important launch is Cheung Kong’s Celestial Heights (Homantin) which has been developed and marketed as a top-end project. Presale results will give us an indication as to whether high-end demand is as resilient as The Palazzo suggests and the
rate at which the 939 units are disposed of will shed light on how management views the market outlook. Cheung Kong bought the site at a record HK$9.4b in 2004, implying an all-in development cost of around HK$8,000psf. If Cheung Kong manages to achieve at least an average HK$12,000psf, development margin is high at 50%.

Hong Kong developers used to margin game. With a mature property market that offers limited new supply, property development is a margin game in Hong Kong. As both The Palazzo and Celestial Heights show, Hong Kong developers have mastered product packaging (in order to obtain premium prices) to a fine art.

In fact, this is one of the reasons why we have reservations on the Hong Kong developers’ foray into China where property development is more a volume game. For the same reason, we are more optimistic on their exposure in the major cities because the population is more affluent and can afford better designed and more expensive housing while such demand in the secondary cities is largely unproven. Expecting little upside to residential prices from current levels.

Residential prices have remained resilient despite the falling volume. According to Centaline’s index, residential prices have dropped only 2% from the recent peak, which was recorded in March. Negative rate and rising rental have served to support property values. However, given the
uncertainty economic situation overseas, which will impact this part of the world, we do not see much further upside on local residential prices this year.

BUY laggards. The share prices of listed developer have been range bound in the past month and we expect this trading pattern to largely persist in the coming months as residential prices move sideways. Since hitting bottom in mid-March, the share prices of developers have rebounded by 13% to 39%, but are still 17% to 34% below their peak reached in November.

Without a more bullish outlook on the sector, we recommend the laggards:
New World Development (17 HK/BUY/Target: HK$26.09) being the cheapest
blue chip developer; Henderson Land (12 HK/BUY/HK$73.69) for its strengthening recurrent income base through HK & China Gas and an expanding rental portfolio; and Kerry Properties (683 HK/BUY/Target: HK$65.16) for its high quality landbank in Hong Kong and China.
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Re: HK Property Stocks

Postby winston » Tue May 20, 2008 6:17 pm

Hong Kong Used Apartment Sales Fall on New Projects
By Kelvin Wong

May 20 (Bloomberg) -- Hong Kong's existing home sales fell last week as the start of offers by the new Palazzo development sapped demand from buyers for used apartments.

Thirty-five of Hong Kong's biggest private developments recorded 150 sales of existing residences between May 12 and May 18, down from 178 a week earlier, according to Midland Holdings Ltd., the city's biggest publicly-traded real estate agency.

Sino Land Co. has sold almost 70 percent of the new apartments at the Palazzo in the city's Shatin district over the first nine days since sales started on May 9, Sing Tao Daily reported yesterday. Cheung Kong Holdings Ltd. will begin offering apartments this week at its Celestial Heights project in the Ho Man Tin district near Kowloon in central Hong Kong.

``The secondary market will probably remain quiet for a while,'' said Buggle Lau, chief analyst at Midland. ``If sales at these new projects are good then sentiment for the whole market will improve and buyers of existing homes may move in as well.''

Sino Land, Hong Kong's fifth-biggest developer, has risen 5.7 percent since sales began at Palazzo, outpacing the 2.7 percent advance in the benchmark Hang Seng Index. The stock fell 6.3 percent to HK$19.96 at 3:17 p.m., the biggest decline in more than two months.

Cheung Kong, billionaire Li Ka-shing's flagship developer, has risen 7.5 percent during the same period. It fell 3.1 percent to HK$126.50 today. The six-member Hang Seng Property index fell 3.5 percent, outpacing the 2.5 percent decline in the wider Hang Seng benchmark.

Hong Kong developers begin selling apartments while they are being built.

Hong Kong April home sales fell 5.1 percent in volume and 30 percent in value compared with a year earlier as supply of new apartments declined, according to property consultant Vigers International Ltd.

``It has been a period of consolidation,'' said Wong Leung- sing, an associate director of research at Hong Kong-based Centaline Property Agency Ltd. ``We hope the launch of the new projects over the last and next few weeks can stimulate more transactions.''

Source: Bloomberg
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Re: HK Property Stocks

Postby winston » Tue May 20, 2008 6:19 pm

HK Property – Office
Investment banks still expanding

Amid the apprehension in the financial sector, Deutsche Bank (DB) has confirmed its re-location to ICC to accommodate its aggressive expansion plan.

DB will initially take up 12 floors with GFA of 0.42m sf and has the right to lease up to 18 floors, or 0.63m sf, tripling its present usage, to house a team of staff that is expected to expand from the current 1,500 to 2,800 (or up to 4,000) in 2010. DB will vacate Cheung Kong Centre in Central CBD in 3Q10.

About 70% of ICC has been leased. According to SHKP, asking rents have risen from the initial HK$35psf to HK$60psf. Morgan Stanley and Credit Suisse are also anchor tenants of the building. Other investment banks, such as ABN Amro, are only taking up space there for their back office functions.

The 0.9m sf ICC Phase 1 is fully leased and tenants have started to move in. The 0.6m sf Phase 2 will be completed in 2009 and Phase 3 in 2010. This is the second expansion plan, amid the sub-prime crisis, announced by the financial sector in two weeks. Last week, we learnt that Fortis Bank will
take up another six floors, or 105,000sf (space to be vacated by Morgan Stanley), at Three Exchange Square.

In fact, we also hear from industry sources that Morgan Stanley has exercised the option to raise its space takeup at ICC from 0.36m sf to 0.57m sf (16 floors) recently (after the sub-prime crisis emerged). These positive developments support our bullish view on Central CBD office rents. While we have been expecting the new demand in Central to come from mainland financial institutions, it seems we should not undermine the appetite for expansion of the existing tenants (foreign investment banks), attracted by the ample business opportunities from China.

BUY Hongkong Land (HKL SP/Target: US$6.09) and Swire (19 HK/Target:HK$124.09).
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HK & China - General News

Postby winston » Wed Jul 02, 2008 8:25 am

HK Property outlook robust
Alfred Liu, The Standard HK
Wednesday, July 02, 2008

Hong Kong's home prices and rents are expected to continue rising in the second half despite higher mortgage rates and other external factors.

Ricacorp Properties said yesterday that as of last Friday, there were 64,342 deals in the housing market in the first half - an 11-year high - driven by a 27 percent jump in sales in the secondary market to 56,468 units totaling HK$187.6 billion, a 48 percent increase over the previous year.

The primary residential market recorded 7,874 transactions worth HK$54.5 billion, down 12 percent and about 2 percent, respectively.

"Even though the rising mortgage rates are affecting consumer sentiment, the housing market will be flat from July to September, but will get better in October," said Ricacorp Properties research head Patrick Chow Moon-kit.

He forecasts an increase of 8 to 10 percent in prices for small and medium- sized projects, and a 5 percent rise at luxury projects in the second half.

The Cullinan, developed by Sun Hung Kai Properties (0016), and the Hanoi Road Project by New World Development (0017) and the Urban Renewal Authority, will be the market focus for the luxury market in the second half. Midland Realty chief analyst Buggle Lau Ka-fai said the market sentiment is temporarily overshadowed by the rising interest rates and expects the housing market to see a 10 percent decrease in the third quarter from the previous quarter.

Centaline Property Agency associate director for research Wong Leung- sing said: "We believe rents in the housing market will rise about 30 percent this year from a year ago, which is brought on by inflation."

Property agents said the primary market recorded about 10 deals yesterday on the handover anniversary break.

Source: The Standard HK
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HK & China - General News

Postby winston » Mon Jul 07, 2008 1:44 pm

APPLE DAILY

-- Hong Kong's second-hand property market has dropped to its lowest level in 2.5 years in terms of the number of transactions, according to real estate agency Centaline.

Property circles believe values will fall in the second half by five to 10 percent.
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HK - Properties

Postby winston » Tue Jul 08, 2008 9:11 am

Positive outlook on the home front
Tuesday, July 08, 2008

Prices in the secondary residential market remain firm
, as Dr Check mentioned yesterday.

For example, a unit in 31-year-old Taikoo Shing, quoted at HK$7,327 per square foot in January, rose to HK$7,638 psf at the end of last month.

Of course, some negative factors such as a bearish equities market and a burst housing bubble in the United States have seen the Hang Seng Index plunge 33 percent from its peak. Some homeowners are willing to reduce their selling prices by 3 percent to 5 percent.

But, as the Centa-City Leading Index shows, overall transaction prices remain high. The positive factors are:

Rents are rising because of inflation.
Some analysts are expecting increases of about 30 percent in 2008 after last year's 20 percent hike. Residential rents are higher than the average monthly mortgage repayment in some areas.

Negative real interest rates still exist and room for a US rate rise is limited.
Accordingly, Hong Kong rates are expected to stay near their historical lows.

The greenback has limited upside and the undervaluation of the HK dollar will be maintained under the peg.


The faltering stock market and low deposit interest rates may convince investors to buy property.


New private residential completions are expected to be at a "lower-than-expected" level of 10,980 units this year and 12,670 units in 2009.

Eleven years after 1997, most middle-class people have a steady income and can afford the downpayment to buy their own flats.

Dr Check and/or The Standard bear no responsibility for any investment decision made based on the views expressed in this column

Source: The Standard HK
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HK & China - General News

Postby winston » Mon Jul 14, 2008 9:13 am

TA KUNG PAO

-- The HK property market has turned sluggish, with new flat sales reporting near-zero transactions over the weekend.
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HK - Properties

Postby winston » Tue Jul 22, 2008 9:27 am

WEN WEI PO

-- Seventy-five percent of people think buying property is a way to fight rising inflation, a study by Midland Realty has found. The market believes more funds will pour into the residential property market.
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Re: HK - Properties

Postby winston » Mon Jul 28, 2008 8:11 am

HK Properties by Dr. Check, The Standard HK

Financial institutions have reported losses of approximately US$435 billion. It will be interesting to see what happens in the third and fourth quarters.

But the bad news seems to be slowing down and Dr Check believes the global equities rebound will continue.

What about the Hong Kong property market? Recently, two key answers emerged from Dr Check's discussion with veteran investors.

First, have prices risen too much?

No, because the US and Hong Kong dollars have depreciated almost 40 percent since early 2002!

Brit and eurozone expats will not be happy if they bought in early 2002, when the Centa-City Index was at 40. It is now at 71. In Hong Kong dollar terms, home values have risen 77 percent but the net gain for these investors is only 6.5 percent in their home currencies.

Second, are Hong Kong properties financed with excessive debt?

Again, the answer is no! The middle and upper classes are the major home buyers. The peak period for buying homes was in the 1990s. Assuming most of them opted for 15-year mortgage timelines, most of them will own their flats outright very soon.

Source: The Standard HK
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Re: HK - Properties

Postby winston » Mon Jul 28, 2008 8:21 am

Rents rising 15pc on tight supply
Alfred Liu, The Standard HK
Monday, July 28, 2008

Housing rents, driven by tighter inventory of rental stock - especially new residential units - are expected to jump 15 percent in the second half over a year ago.

"Only three projects, Harbour Place, The Palazzo and the sixth tower of Bel-Air No 8, are likely to be all ready for occupation in the second half," said Ricacorp Properties head of research Patrick Chow Moon-kit.

"The demand for rental flats gets larger as there are usually more than 10 projects for occupation in a half-year period. Also, property owners are under inflationary pressure to raise rents."

Government figures show consumer prices in Hong Kong rose 6.1 percent in June year-on-year, while private housing rents increased 8.4 percent.

According to Centaline Property Agency, the average rent at 73 large housing estates in June was HK$17.40 per square foot, up 23.4 percent from the same month last year.

Private housing rents jumped 28.3 percent last month over a year ago to HK$24 psf on Hong Kong Island. In New Territories East, they climbed 22.4 percent to HK$15.30 psf. Kowloon rents rose 20.8 percent to HK$18.60 psf, and New Territories West 18.3 percent to HK$12.90 psf, Centaline data shows.

Rental yields for major housing estates were about 4 to 5 percent, said Centaline's associate research director Wong Leung-sing.

Meanwhile, a property consultant said buyers can gain from rents in the short term, but capital value may drop.

"The room for rents to increase can help combat inflation, but property prices are expected to fall,"
said Ricky Poon, executive director of residential sales at Colliers International.

Poon predicted prices for luxury flats will drop 5 to 8 percent in about three months, dampened by the volatile financial market. Chow expects prices in the mass market to fall 7 to 8 percent in the second half from a year ago.

Source: The Standard HK
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