Bricks and Mortar | Squeezed Chinese developers deepen push into HK property market
China City Construction's move on Sha Tinsite seen as shift from tight market at home
With their margins squeezed at home, mainland developers are increasingly rushing to buy land in Hong Kong.
State-backed China City Construction (International) has a 90 per cent stake in a venture which won a waterfront site in Sha Tin for a higher-than-expected HK$2.14 billion on Wednesday.
The bid, with Hong Kong developer and construction firm Chun Wo Development Holdings, is seen as deepening a push by mainland developers into the city's market.
Nicole Wong, CLSA's regional head of property research, said mainland firms faced single-digit profit margins in the depressed domestic market, exacerbated by fierce competition and growing economic uncertainties.
"Hong Kong will become an alternative market for mainland developers planning expansion," Wong said.
In Hong Kong, projects not only generated a net profit margin of 13 per cent but also had lower funding costs, she said.
The city's interest rate is about 3 per cent, against more than 7 per cent on the mainland.