Companies brace for tough year when any profits will be prized - Property
Achieving higher property prices could be a big challenge for developers in 2010, in part because prices recorded strong growth in 2009, but developers nevertheless remain upbeat.
'Our company is optimistic about the market outlook,' says Cheung Kong (Holdings) executive director Grace Woo Chia-ching. 'The demand for residential is strong, but there are fewer and fewer development sites for sale.'
The benchmark Centa-City Index puts the average price rise in major estates in 2009 at about 28 per cent.
Chu Ip-pui, an executive director of Kerry Real Estate Agency, is also confident about 2010. 'I haven't seen any negative sentiment in the market,' he says. 'I believe the market will be stable this year.'
Although there is concern about capital outflow, Chu says it will not have any impact. 'A large amount of capital flew into Hong Kong and I believe that if there is an outflow it will be limited.' Because of low interest rates and strong demand for homes, he believes prices will rise slightly in 2011.
Although the government faces public pressure to address concerns that home prices are not affordable, Chu believes the government will only remind people to be rational when buying a home. 'We have a free market, and I don't think the government will bring in strong [control] measures,' he says.
The government is reviewing policy conditions for developers incorporating 'green features' such as balconies and utility platforms in new projects. The market expects there will be some tightening of the policy when details are released early in 2010. This will affect developers who have used the cheaper-to-build green features - whose area is averaged into the size of each unit - inflating the size of each flat.