Market to see more players
The city's property market, which is dominated by a few large developers, is expected to be opened to more competition under the administration of chief executive-elect Leung Chun-ying, analysts say.
Last week, Shui On Land chairman Vincent Lo Hong-sui, a supporter of Leung, said at his company's results announcement conference that the property market should not be monopolised by the four major developers.
'There should be more competition. And even if there is more competition, the four major developers still have an edge as they have been in the market for a long time,' Lo said.
Although he expects the business environment to change, Lo said he would not invest in the Hong Kong property market again. His last investment in the city's market before shifting to the mainland was Bauhinia Garden, in Tseung Kwan O, a subsidised housing estate under the private sector participation scheme, in 2001.
Research by Centaline Property Agency shows that Cheung Kong, Sun Hung Kai Properties, Sino Land and Henderson Land accounted for 68 per cent of new homes sold last year.
This year Cheung Kong and Sun Hung Kai are expected to be the two biggest suppliers of homes, responsible between them for 32.3 per cent, though that will be a big drop from their 78 per cent share last year.
Analysts believe the dominance of the major developers will change in the long run.
David Ng Ka-chun, head of China property research at Macquarie Capital Securities, said more newcomers would be drawn to the market if Leung increased land supply, as he pledged he would do in his election campaign.
Ng cited China Overseas Land & Investment's winning bid for a recently auctioned Ap Lei Chau site and Agile Property's vice-chairman Chan Cheuk-yin's purchase of a Sai Kung site as examples of what might be expected in the future.
Last Thursday, China Overseas Land snapped up the plot in Ap Lei Chau for HK$2.54 billion, while Chan grabbed the Sai Kung site for HK$700 million. The winning bid for the Sai Kung site was a record for the New Territories in terms of the price paid per square foot.
'If land supply continues to increase, the big guns will not be able to absorb the supply or give up on bidding for all the sites because their price expectations will be higher than others. Then the other developers will have a chance,' Ng said.
However, he does not expect a sudden change to the market.
'Supply from Henderson Land Development and New World Development will continue to increase, as they have redevelopment projects under way in old districts and are converting agricultural land,' he said.
Ng also said if there was increasing land supply, developers would not bid aggressively for projects. 'The price difference between new projects and second-hand homes will narrow,' he said.
Eddie Hui Chi-man, a professor in the department of building and real estate at Hong Kong Polytechnic University, said if more development sites were made available, more developers would join in bidding for the land.
'The cake would be bigger,' Hui said. 'The big developers can't snap up all sites. Small and medium-sized developers will have more opportunities to acquire development sites.
'If the cake is small, the competition will only be between a few developers.'
Last month, the government divided four sites, in Tseung Kwan O, Tuen Mun and Tai Po, into eight sites.
Secretary for Development Carrie Lam Cheng Yuet-ngor said she believed this would attract more developers to bid for the sites.