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Billy Adams

MORE Hong Kong buyers are in danger of losing their homes in China following Beijing's economic crackdown.

  A leading analyst last night predicted woe for people who bought houses from small mainland firms, which had felt the full force of the government's austerity drive.

  Others who might be thinking of buying into one of the luxury villa estates being promoted in China were urged to deal with reputable firms.

  Peter Churchouse, head of research at Morgan Stanley, said the right buy now could prove a fantastic investment in two years' time.

  But he warned buyers to scrutinise every technicality before signing contracts.

  The crunch of Beijing's curb on speculative investment, which jumped by more than 100 per cent in the first half of the year, was felt on Sunday - the deadline for all unauthorised loans to be called in by the banks.

   Affected loans were estimated at a massive 100 billion yuan (about $150 billion).

  Analysts believe hundreds of locally funded projects which relied on pre-sales could now end up having to scrap their development plans - leaving a mass of unfinished projects.

  Mr Churchouse said once cases of people losing on their investment began to seep through in bigger numbers, ''the froth will come off the top of the market''.

  ''It's going to be a disaster for people who have been caught up on the wrong side of this crackdown,'' he said.

  ''Even from the middle of last year, it was quite clear to me that the property market in China was going to end up in tears.''   It is generally believed the major players will be unaffected by the Chinese authorities' attempt to cut out speculative property ventures by calling in loans and stamping out unauthorised land deals.

  Joint ventures, with substantial injections of foreign capital, are likely to benefit in the mid-term, Mr Churchouse said.

  But smaller scale developments, where firms borrowed money supposedly for infrastructure projects and dabbled in property instead, were feeling the brunt of the measures.

  ''There are people from Hong Kong who have lost their money and [those who are still] going to lose their money.

  ''I think many people have also noticed what has been happening and just stood back in recent months.

  ''For those thinking of buying a home at the moment I would say they should check every detail. It's extremely important to do so.''   Amelia Lau, L & D Associates acting general manager, said smaller developers would possibly go bust.

  In areas where land had been developed illegally, the authorities were cracking down hard, she said.

  ''Properties that are already recognised and supported by the banks here still have more potential and their prices won't be affected,'' she said.

  ''Others who are not established in the market have a possibility of going bust.''   Mr Churchouse said many property developments had failed to get off the ground or had simply been ''stopped in their tracks''.

  The result has been reduced competition for the big players who had been given renewed confidence about their prospects of marketing ventures with success.

  Mr Churchouse believed the crackdown would produce a more mature market with a good mortgage lending and financing system, real estate laws and regulations.

  The introduction of a real secondary market in the next few years would make developers ''drool'', he said.

  One listed mainland property company, which he did not name, was a perfect example of how the bigger players were being affected.

  He said the drying up of work had sent construction costs tumbling and there was no pressure from the banks to return funds.

  The price of the steel, which had jumped 60 per cent in the past nine months, had dropped by 15 per cent in the past few weeks, according to the property company chairman, Mr Churchouse said.

  Customers, however, were paying slightly more interest and were finding it more difficult to secure finance to buy.

  ''He reckons he could have sold 5,000 units in Beijing before the austerity drive in one go.

  ''But he thinks that would now have to go down to 3,000 if he wanted to sell them all.

  ''He also believes the prices will come off just a little bit.''   Karen Wong, managing director of Colliers Jardine, said developers had rushed to put their products on the market before the full force of the crackdown took effect.

  ''A number of people will get their fingers burnt,'' she said.

  ''The Hong Kong buyer is now smarter and knows what to look for.

  ''They should look at the developer and identify people from substance. And they should also go for financial and human resources with experience in China.'' 



Crackdown hits HK owners