SHKP keen on China prospects

Sun Hung Kai Properties says it will explore investment opportunities on the mainland that may emerge in the wake of the just-concluded third plenary meeting of the Communist Party.

"Mainland leaders have announced the blueprint for the nation's development in the next 10 years. The development direction will also affect Hong Kong," said Thomas Kwok Ping-kwong, a joint chairman and managing director of the city's largest developer by market value.

It would also affect general investment patterns, Kwok said after the company's annual general meeting yesterday, adding that there would be many investment avenues once the economic roadmap was laid down.

Citing the Shanghai free-trade zone, Kwok said Hong Kong's business community should study the opportunities thrown up by the new zone.

He said SHKP would continue to bid for land across the border. "But we will only focus on Beijing, Shanghai, Guangzhou and Shenzhen."

In September, SHKP bought a plot in Shanghai's Xujiahui district for a record 21.77 billion yuan (HK$27.7 billion).

"At present, about 20 per cent of our investments are on the mainland. We primarily still focus on Hong Kong," said Raymond Kwok Ping-luen, another joint chairman and managing director of the company.

As for Hong Kong, the developer said it did not expect home prices to fall drastically.

"Home prices go up and down. They will not keep going up, but they will not fall a lot either," Thomas Kwok said.

But Eva Lee, the head of Hong Kong and China property research at UBS, forecast prices of mass residential units would fall 25 per cent by the end of next year, with a 30 per cent drop for luxury flats.

"There will be more new housing supply from next year. The new supply will increase to 17,000 flats in 2016, compared with an average supply of 11,000 over the past 10 years," Lee said. "But housing demand is less than before as the government's cooling measures have kept property investors away from the market.

"We estimate half of the flats under construction are valued at more than HK$8 million each, which is out of reach for end-users."

Lee said a possible increase in interest rates would also affect liquidity and property prices.

SHKP surprised the market when it released 181 flats for sale at its luxury project Cullinan last month at discounts of up to 21 per cent.

But Victor Lui Ting, SHKP's deputy managing director, said low mortgage rates, home-buying desire and high construction costs would support the market.

SHKP set a contract sales target of HK$28 billion for the year to June - 14.9 per cent lower than the past financial year.