Property developers Lee Shau-kee, the Kwok brothers and Li Ka-shing all made the same move after announcing their company results: they bought shares of their own firms heavily, to the tune of almost HK$1.54 billion collectively. Mr Lee, chairman of Henderson Land Development, has been most aggressive, sinking HK$850 million into his flagship this month. The Kwok brothers bought HK$623 million worth of Sun Hung Kai Properties shares, while Mr Li paid HK$64 million for Cheung Kong (Holdings) stock over the past two months. Despite sound fundamentals for the real estate sector and strong results for last year, big property stocks are trading at about 20 per cent below their peak in December last year. Should investors follow the developers' leads and buy property cheap plays? Having risen more than 28 per cent since August last year as per real estate agents' estimates, home prices underwent a turn in late February as global economic uncertainties escalated. Saying that the local property market had entered a consolidation phase, investment banks UBS and Bear Stearns projected that home prices would be adjusted downward by 5 per cent to 7 per cent in the short term. Accordingly, Bear Stearns lowered its price increase expectation in home prices to 30 per cent from 40 per cent. 'But this consolidation will not last long,' said Eric Wong, UBS joint head of Asian property research. 'The market will be quiet for three to six months.' According to Centaline Property Agency's Centa-City Index, which covers sales at 45 of Hong Kong's private residential estates, prices dropped to 71.93 points last week from this year's peak of 73.98 points in mid-March. The index has stayed below the 100-point reference level reached in July 1997 when the market peaked. Cash-rich developers 'can wait until the market recovers to achieve higher pricing rather than sell in volume', Mr Wong said of the new supply. Moreover, with few sites coming up for auction, big developers would find it increasingly hard to replenish land so they might prefer to hold on to their projects until the market turned hot, he said. Meanwhile, with their strong cash positions, some developers will take the dip in the market as an opportunity to stock up on land at lower prices. Analysts believe that the negative interest-rate environment will support property sales. Property investments yield more than fixed deposits now that the effective mortgage rate is down to 2.5 per cent. Meanwhile, supply of homes in the primary market remains fairly tight. The Rating and Valuation Department projects new completion for this year to reach 10,980 units, fewer than its earlier estimate of 16,000 and just 510 more than last year's decade-low supply of 10,470. STOCK SELECTION Despite sound domestic fundamentals, Bears Stearns has revised downward this financial year's price targets for leading developers to reflect rising global economic uncertainties. In early April, analyst Adrian Ngan lowered his target price for Cheung Kong to HK$158 from HK$181, for SHKP, to HK$185 from HK$201, and for Henderson Land to HK$85 from HK$93. As property stocks should start to reflect the positive fundamentals, UBS's top picks in the sector are Henderson Land, New World Development and SHKP as they are primary beneficiaries once market sentiment improves. Li Kwok-suen, a fund manager at Philip Capital Management, said that institutional investors should find blue chips, including property stocks, attractive, given the weak US dollar.