RESIDENTIAL PROPERTY

Henderson Land chairman predicts the city’s home prices will continue to fall

PUBLISHED : Monday, 21 March, 2016, 5:20pm
UPDATED : Tuesday, 22 March, 2016, 8:51am

Home prices in Hong Kong will continue to fall another five per cent in the next couple of months as local developers are in a rush to sell homes , says chairman of Henderson Land Development, Lee Shau-kee.

Lee said the city’s housing prices will fall about 30 per cent from their peak in the wake of the high development costs. The market is about half way throught the price correction cycle, having given up around 15 per cent from highs last autumn, he added.

“In view of the coming new launches, I believe home prices will fall another five per cent in the next one to two months, ” he said.

Then prices will then gradually fall another 10 per cent ,Lee said.

His prediction came as Henderson Land announced its underlying profit, which excludes property revaluation gains, rose 12 per cent to HK$11 billion for the year ended December, compared to HK$9.82 billion for the previous year.

Underlying earnings per share were HK$3.33 compared with HK$2.99 in the prior year.

Turnover totaled HK$21.33 billion, an increase of 27 per cent from HK$16.75 billion in 2014. Reported earnings per share were HK$6.46 , up from HK$5.11 in 2014.

The Board proposed to make a bonus issue of one new share for every 10 shares held.

In a rare move at the result announcement press conference, Lee said he wanted to take the opportunity to tell investors that the company’s outlook is promising.

He said the stock was under valued, as the book value of its

net asset value attributable to equity shareholders as at 31 December

2015 stood at HK$76.

“DTZ valued us at HK$100.1 a share,” said Lee.

Henderson’s shares rose 1.3 per cent to HK$48.45 on Monday.

Lee said the group’s land holding included about 11 million square feet in the New Development Areas of Fanling North, Hung Shui Kiu and Ping Che.

“With such an extensive land holding, their future contributions are promising,” said Lee.

Li Kwok-suen, a fund manager at Philip Capital Management Fund, said the huge discount reflected the dim outlook of the property market. “The value will be better reflected if Lee restructures the group of businesses,” said Li.

However, Lee of Henderson said he has no plan to introduce a restructuring of the group or take Henderson Land private.

“I have already owned 72 per cent of Henderson Land, what is the point to privatise the company?” he said.

Investment banks such as BNP Paribas said last month that the deep discount to net asset value could be catalyst for Lee to take the company private.

Turning to mainland China, Lee said that “destocking” of excess housing inventory remains the main policy focus in 2016.

The company will actively look for quality residential and office projects in major mainland cities, as well as those second-tier cities exhibiting great potential, he said.