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Doris Chan

Sun Hung Kai Properties (SHKP) expects home prices to rise by up to 10 per cent during the next year.

In a slap in the face for analysts who last week downgraded the property sector, the developer's vice-chairman and managing director, Thomas Kwok Ping-kwong, yesterday issued his own forecast - a rise of between 5 per cent and 10 per cent during the next 12 months.

He said analysts downgrading the property sector did so strictly on personal sentiment.

'The analysts have their views of the market and we have our own,' he said.

'We have a very clear understanding of the Government housing policy but that does not mean everyone does.'

It was the latest barrage in a war of words between property analysts on one side and the Government and developers on the other about the prospects for the property market.

SHKP's forecast is in line with estimates by the Government, which has been defending the sector since two big investment banks turned bearish last week.

The bankers said the price of flats could slump 10 per cent by the end of the year amid a confused government housing policy.

Yesterday, after a ceremony to seal SHKP's winning bid to develop the HK$25 billion Kowloon Station packages 5-7, Mr Kwok was firm that prices would rise 5 per cent to 10 per cent in the next 12 months. He also strongly defended the Government's much-criticised housing policy.

Among the reasons cited by analysts for investors dumping property counters last week was a change in the Government's policy, which was again seen to be moving towards playing a bigger role in the housing sector.

But Mr Kwok said he had a copy of a letter Secretary for Housing Dominic Wong Shing-wah had sent to the Real Estate Developers Association. The letter fully explained and clarified the Government's long-term housing policy.

'Mr Wong explained clearly that the target of producing 730,000 units over the period 2000/01 to 2007/08, stated in the latest policy address, is the Government's long-term objective,' Mr Kwok said.

'Mr Wong said these units would not be released on to the market in fixed numbers each year, but the number released would be subject to the needs of the market.

'Mr Wong also assured us that the Government would be flexible and adjust housing supply in accordance with changes in the market,' he said.

Mr Kwok said SHKP had never found the Government's housing policy to be confusing or misleading. In fact, it was clear and 'in accordance with our own ideas', he said.

His comments came a day after Mr Wong accused stock market analysts of misleading the public.

He said the property market was 'moving towards a healthy and stable development'.

Yesterday, property stocks were mixed after falling on Friday in the wake of UBS Warburg and Salomon Smith Barney recommending investors pull out of the sector.

SHKP shares rose 25 HK cents to close at HK$63, after a plunge of 6.69 per cent on Friday.

SHKP's positive forecast comes ahead of its planned release of HK$13 billion worth of property developments for sale during the next six months, including a luxury development in Leighton Hill, Causeway Bay, and residential projects in Tseung Kwan O and Western District.

Early this month, SHKP acquired a prime residential lot in To Kwa Wan at auction.

Mr Kwok said the volatile stock market would have a short-term negative impact on buyers' confidence.

The housing sector's prospects should be positive given an improving economy and declining unemployment.

Although confident about the future of the property market, Mr Kwok said it was not the right time to raise prices. 'It has been very hard in the past few weeks.'



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Sun Hung Kai Properties

Developer expects home-prices increase of up to 10pc despite gloomy analyst forecasts