New World Development chairman Henry Cheng Kar-shun yesterday suggested the government cancel the pre-sale consent scheme to increase housing supply and cool the property market.
"There would be more new residential projects released for sale immediately if the government cancelled pre-sale consent. New housing supply would increase immediately," he said, following the release of company's results.
Under the pre-sale consent scheme developers have to get government approval to start selling incomplete projects. The scheme was designed to protect buyers' rights but approvals can take more than a year.
The government is also trying to increase land supply to cool the property market and help young homebuyers get on to the property ladder.
"The [general land supply] policy is effective but we have to wait two to three years to see the impact," Cheng said, adding the housing supply shortage would remain in the short term.
But, he said the downside potential of property prices was limited. "Land prices have fallen to HK$3,000 and HK$4,000 per square foot, which is a low level. However, construction costs are very expensive at HK$3,000 per sq ft. It means the total investment costs are HK$7,000 to HK$8,000 per sq ft," he said.
Cheng said he agreed with the government's plans for development in the northeastern New Territories to boost supply.
New World Development said its underlying profit grew 7.5 per cent to HK$5.02 billion for the year to June, thanks to an 11 per cent increase in property sales and 14 per cent growth in property investment. The profit from property sales was mainly contributed by The Masterpiece project in Tsim Sha Tsui and developments on the mainland.
New World has been active in launching new projects in recent years. The company generated about HK$13 billion from the sales of 1,318 flats at four projects from July last year to September. New World China, its mainland property arm, said net profit rose 1.8 per cent to HK$3.08 billion for the year to June.
Its revenue from contracted sales dropped 26 per cent to 9.81 billion yuan (HK$12.06 billion), while sales volume dropped 27 per cent to 780,379 square metres.
Cheng refused to reveal the latest condition of Cheng Yu-tung, his father and New World's former chairman, who has been in hospital with an undisclosed illness since last week.
"He hasn't been involved in the company's operations since he retired last year. It won't affect the company," Cheng said.
Shares in New World Development increased 3.46 per cent to close at HK$11.96 yesterday, while shares in New World China climbed 0.35 per cent to HK$2.90.