Hong Kong property

Cheung Kong eyes bumper property sales in 2013

Developer expects its flat sales next year to be even higher than in 2012, despite government measures to cool the market with new taxes

PUBLISHED : Friday, 28 December, 2012, 12:00am
UPDATED : Friday, 28 December, 2012, 4:14am

Cheung Kong (Holdings) expects to bank between HK$28 billion and HK$30 billion from property sales in 2013, higher than this year despite the market being clouded by growing uncertainty.

The projected property sales will be slightly more than this year's HK$27 billion on sales of 3,300 units, said executive director Justin Chiu Kwok-hung.

"Our property sales are very predictable, very secure. We are like a production line. Every year, we can produce 3,500 to 4,000 units for sale. Property sales amount to between HK$25 billion and HK$35 billion every year," said Chiu. The difference depends on how many luxury units will be scheduled for sale.

Despite facing government policies designed to deflate the property market, Chiu said Cheung Kong had built up a strong sales team.

"No matter whether the market is good or bad, we can handle it," he said.

Next year's development projects include City Point at Tsuen Wan West MTR station, which could offer for sale more than 1,700 units, Chiu said.

Meanwhile, a 1,628-unit joint venture development with Nan Fung Development, known as Lohas Park phase three, will be scheduled for pre-sale. Its Fung Yuen development in Tai Po involves 1,356 units.

All projects are subject to the granting of pre-sale consent by the government, Chiu added. In terms of the firm's sales strategy to combat government policies, he said that as one of the biggest developers in the city, Cheung Kong preferred large-scale projects, with each comprising a number of development phases.

This allowed better control of the sales schedule and pricing of developments.

Citing the 4,900-unit Festival City development in Tai Wai as an example, Chiu said that if these units were built by various developers, prices could see pressure when such developers rushed to speed up sales.

"As a sole developer, we can develop the project phase by phase," he said.

This explained why Cheung Kong was willing to pay more prices for land at Tsuen Wan West MTR station, where it had bought two sites.

But in Tseung Kwan O, Chiu said Cheung Kong would pay less aggressive prices.

A number of sites have been offered for tender in the past few months, and they are owned by various developers, he said.

"If the market is good, these units can be absorbed. But in a bad market, developers could fight head to head to speed up sales. They may cut prices." This would affect the whole area, he added.

Looking ahead, Chiu said prices will not face a correction as a sound economy and low interest rates would continue to support the market. Limited supply is still an issue in prices, however.

"The government is facing a lot of difficulties in increasing supply. It faces many objections," he said.

Chiu believes that the government can meets its annual target for flat supply in 2014 and 2015.

"But how about 2016 and afterwards?" he said.

Chiu said the buyer's stamp duty - introduced at the end of October - is effective in stopping overseas funds from buying Hong Kong properties.

Investors with hot money - triggered by the latest round of monetary easing in US - would prefer not to pay the 15 per cent stamp duty and will shift to the stock market, he said.

Cheung Kong early this month put its One West Kowloon project in Lai Chi Kok on the market, but the sales were slower than analysts' expectation.

"Those analysts are not realistic. Every unit is worth more than HK$10 million so sales could not be very fast," Chiu said.

As of December 17, the company has sold more than 70 flats at One West Kowloon, reaping more than HK$800 million.