Developers sell assets in face of rising rates

Rush to cash in may be linked to tapering of Federal Reserve's bond-buying programme

PUBLISHED : Tuesday, 24 December, 2013, 2:01am
UPDATED : Tuesday, 24 December, 2013, 2:01am

Buy low, sell high. The mantra for property investors runs off the tongue easily, but achieving it is another matter. In the absence of a crystal ball, it pays to keep a close watch on the actions of some of the big developers to glean a trend for home prices over the coming months.

Just hours after Secretary for Development Paul Chan Mo-po released on December 18 more land for sale for the quarter to March, Sun Hung Kai Properties put on the market a further 120 flats at its Century Gateway II project above Tuen Mun Station on the West Rail Line.

Later that day, Cheung Kong put up on its website the sales brochures of its 118-unit Diva project in Tai Hang. As the project is being built on a plot with an old lease, marketing will not be subject to the pre-sale consent scheme. This means the developer can offer units at Diva anytime instead of having to make a public release of the brochures seven days before the official market launch.

Sister company Hutchison Whampoa had earlier indicated it would keep for leasing five of the remaining super-deluxe houses at 28 Barker Road on The Peak after it sold two houses last month. But it has had a change of heart and instead decided to dispose of the rest of the project to cash in on improved sentiment.

Last Thursday, the developer sold another house for HK$530 million, raising HK$1.8 billion from the sale of just three houses at the project in less than a month.

The sale comes in the wake of the government's offer of 12 residential sites and one commercial plot for tender for the January-March quarter. The residential land parcels will provide 5,500 units, 66 per cent more than the 3,300 flats from land announced for tender this quarter. For the financial year to March, the land sales will be sufficient to build 13,700 flats.

"In the next quarterly land sale programme, the government will sell the greatest number of sites and provide the highest flat production capacity since the launch of the quarterly programme in 2011," Chan said when announcing the latest release.

With the government still struggling to meet its 20,000 housing target this financial year, MTR invited expressions of interest the following day for the tender of a 196,000 square foot site in Tin Shui Wai, which will yield a gross floor area of 982,280 sqft and provide 1,500 flats. The tender closes on Friday.

It pays to keep in mind that Hong Kong faces the prospect of rising interest rates after the United States Federal Reserve announced it would reduce its bond purchases from next month.

One may wonder whether the rush by developers to cash in their assets may have something to do with all that talk of higher borrowing costs reducing demand.