Relief eludes property gurus
PEOPLE may say it is going to be an uneventful Budget and, for the most part, this could be true. But for property developers, it may provide food for thought.
Badly bruised by the Government's anti-property speculation measures, the sector's tycoons must be wondering when the Government is going to give them a break.
The first part of Sir Hamish Macleod's Budget, unveiled by Secretary for the Treasury Donald Tsang Yam-kuen yesterday, offered a timely hint.
Against the backdrop of a subdued market which led to a downward adjustment in the estimated land income for the 1994-95 financial year, Sir Hamish and his financial team are pointing to a more rosy picture in 1995-96.
It is said to be the Government's best estimate that, in 1994-95, land revenue will have dropped to about $30 billion but will increase by about 23 per cent to $37 billion in the new financial year. At face value, the forecast seems to indicate the Government has decided the battle with the developers is over.
Yesterday's announcements by the Hang Seng Bank and the Standard Chartered Bank that their mortgage lending ceilings would be relaxed from 50 per cent to 70 per cent for luxury apartments and properties more than 20 years old came as a nice coincidence.
But it is not yet time for key market players to take comfort from the latest developments.
Officials deny they practise a high land-price policy, even though that appears to be true and land-related income represents a core element in the Government's total revenue.
Notwithstanding its efforts to calm the property market, retaining a reasonable level of land income remains very much a government objective.
In the coming year, officials must make sure they do not push down property prices.
Negotiations are underway on the premium for airport railway-related properties - a key source of funds for the new airport and associated projects.
It is a difficult balance to strike. If the Government predicts too low a figure for land income, it will undermine its negotiating position on the airport land. But a high figure may send the wrong signal and renew market speculation.
It may be the Government's plan that public auctions, which affect home-buyer sentiments, should be viewed with caution, while private sales, which are shielded from the public eye, help reap billions of dollars for the Treasury.
Whether Hong Kong's property gurus will allow themselves to be willing partners to such a plan is anybody's guess but signs have emerged Sir Hamish may be looking for some new source of players to tilt the balance of power.
It will be interesting to see if, in the months to come, there is a gradual shift to breaking up sites into smaller lots to cater for smaller developers' budgets.
For the big players, it is not time yet for rejoicing.