SHKP attacks calls for HOS resumption

PUBLISHED : Friday, 12 March, 2010, 12:00am
UPDATED : Friday, 12 March, 2010, 12:00am

Sun Hung Kai Properties, the city's biggest developer by market value, has slammed suggestions that the government should resume building Home Ownership Scheme flats, saying a surge in HOS supply made things worse during the Asian crisis.

The developer made the comments as it announced that underlying interim profit rose 44 per cent to HK$6.51 billion for the six months to December.

Taking into account a HK$8.61 billion revaluation gain from investment properties, compared with a revaluation deficit of HK$3.81 billion a year earlier, net profit soared 19.7 times to HK$14.33 billion.

An interim dividend of 85 HK cents, up 6 per cent, was declared.

Property sales rose 19 per cent to HK$2.12 billion and net rental income increased 13 per cent to HK$3.96 billion.

Vice-chairman and managing director Thomas Kwok Ping-kwong called on government to build more public housing and increase land supply to ease the housing shortage. But he drew the line at a resumption of HOS flat building.

'It would be unwise for the government to reallocate part of the land originally set aside for the development of public housing for HOS flats,' he said.

He said a sharp surge in the supply of HOS flats in the late 1990s aggravated the impact of the Asian financial crisis on the property sector, with many owners feeling the pinch after the price of their properties slumped. The number of households in negative equity at one point swelled to more than 100,000 households after prices slumped as much as 70 per cent from the peak level of 1997.

'The government therefore decided to leave the [HOS] market,' Kwok said.

Kwok said the government should not rush to re-enter the market in response to the temporary housing shortage, despite pressure from the media.

Early this week, New World Development managing director Henry Cheng Kar-shun, Shui On Group chairman Vincent Lo Hong-shui, HSBC Bank (China) chairman Vincent Cheng Hoi-chuen and politicians called on the government to resume building HOS flats and provide more housing.

But Kwok said the average annual flat completion rate over the past five years was 12,000 units, well below the 15,000 annual completion rate over the previous five-year period.

'The government should prescribe the right medicine: increase land supply for development of small to medium-sized flats,' he said.

Kwok said the company would build more small to medium-sized flats, adding that the proposed 2,400-unit Yoho Town phase three development in Yuen Long would be dominated by flats under 900 square feet.

Eric Chow, an executive director of Sun Hung Kai Real Estate Agency, said the firm would release 3,900 units worth HK$25 billion for sale by the end of December.