• Sun
  • Dec 21, 2014
  • Updated: 9:11am
PropertyHong Kong & China
PROPERTY

'Worst is over' for Hong Kong real estate, says Cheung Kong executive

Cheung Kong executive director says low rates will continue to benefit housing and criticises those who say US tapering will damage the market

PUBLISHED : Monday, 06 January, 2014, 12:28am
UPDATED : Monday, 06 January, 2014, 7:05am

The worst is over for Hong Kong's housing market, says Cheung Kong executive director Justin Chiu Kwok-hung, who has a blunt assessment of pundits calling a market correction because of reduced US monetary stimulus: they are "too simple-minded".

"I believe the low interest rate environment will continue into 2015, as the US tapering is being launched in a gradual process," said Chiu, referring to a cut in the Federal Reserve's bond-buying programme.

Any rate rise would be in the order of a quarter of a percentage point to half a percentage point, he said. The low interest rate regime would continue to benefit the housing sector.

Chiu made the comments as the developer prepares to launch its 118-unit Diva residential project in Electric Road, Tin Hau, this week.

Cheung Kong on Thursday said the average price of the first 50 flats at Diva would be HK$22,514 per square foot, 16 per cent less than for units at a nearby Henderson Land project, The Hemispheres, released in November, without factoring in extra discounts.

Cheung Kong, the largest property developer in Hong Kong by market capitalisation, this year plans to sell five residential projects, totalling more than 4,000 units, with a sales revenue goal of more than HK$30 billion.

"The worst is over for the city's housing market. You can see from the strong sales responses for the recent new project launches, " Chiu said, adding that home prices had found their support.

The US Fed announced in December it would start to taper its aggressive bond-buying programme to US$75 billion a month, from US$85 billion, from this month.

"The market had overreacted to the impact of the US tapering on Hong Kong property," Chiu said.

Market observers have voiced concern in recent months that a winding back in US quantitative easing would reduce liquidity in the market - a move also expected to push up interest rates. The Hong Kong Monetary Authority has said that asset prices in emerging markets would be under pressure amid possible capital outflows.

However, Chiu said: "Whoever still uses [tapering] as a reason to predict sharp price falls are being too simple-minded." US interest rates would rise at a gradual pace, he said.

Housing transactions in the city plunged last year after the introduction of measures aimed at cooling the market, including a doubling of stamp duties and tightened mortgage lending.

Figures from the Land Registry last week showed there were 50,676 residential transactions last year, 37.7 per cent fewer than the 81,333 deals recorded in 2012. The total value of transactions dropped 33.9 per cent to HK$298.94 billion. However, prices in the secondary market rose 2.8 per cent in 2013, according to Centaline Property Agency.

Chiu said that, after months of monitoring the market, developers had indentified increased transaction costs as the greatest deterrence for buyers.

"Developers are paying the extra costs for buyers, so they are starting to come back," said Chiu, whose company is offering early buyers at Diva a 7.5 per cent discount on stamp duties, as part of a package of sweeteners.

He said the secondary market would remain quiet as individual flat owners were unable to pay extra costs for buyers.

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This article is now closed to comments

amazinghk
Shame on you SCMP for posting such a biased article. This looks more like a press release from CK. Clearly Justin Chiu Kwok-hung has a vested interest in talking up the property market. The sad reality is however that many HK people believe these sensationalist headlines and will flock to the new developments to buy their overpriced properties. When this bubble bursts, it will be a painful reality check for many people...
pragmatist
A good journalist would report with input from broader set of stakeholders.
impala
When will the SCMP get rid of Peggy Sito, who has missed her calling as PR executive at a property developer?
whoaman
What a spin doctor... the 'worst' is over!!??!! This housing market is the highest in the world, and scores of middle class folks (like me) can't even come close to buying a home! What a self serving typical LKS crony jerk!
tomgriffin1985
JP Morgan Analysts '20-30% fall this year'
UBS analysts '15-20% fall this year'
BOAML 'up to 15% fall'
Knight Frank 'up to 15% fall'
Cheung Kong Holdings - 'The worst is over'
paulccwong@gmail.com
Justin Chiu is so confident that the worst is over!!!Than why is he selling properties below the market price and on top of that Cheung Kong is paying for the stamp duties for his customers. Looks more like panic selling to me. His words and his action differs.
lexishk
She'll walk into a corporate comms position at Cheung Kong right after Chinese New Year.
hkfirst
This 'article' is pure PR garbage, which is sadly becoming typical 'reporting' from the SCMP. Where is another side to the story from some kind of independent analyst, and that doesn't mean someone from one of the agencies.
village2206
A neatly wrapped sales gimmick.
don67
I want to know what this guy's been sniffing. Must be powerful stuff!

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