Sun Hung Kai Properties sees steady prices even as analysts forecast falls
Deputy managing director Victor Lui Ting's prediction contrast with analysts, who forecast prices to fall by up to 30pc by the end of 2015
The deputy managing director of Sun Hung Kai Properties, Victor Lui Ting, said he expected homes prices to be steady this year even as analysts made gloomy forecasts and developers dropped their asking prices.
"My forecast is that home prices will be stable this year," he said last month as reporters visited the company's soon-to-launched Riva residential project in Yuen Long.
"Analysts who say otherwise may be unaware that rising construction costs and a shortage of labour will fuel increases in development costs, and with such high costs, developers are unlikely to cut prices significantly."
Analysts say the prices of new flats may fall sharply this year due to increased supply and the possibility that developers will cut prices to clear inventory.
CLSA predicted home prices could drop by 10 per cent this year. Barclays said they could fall by up to 30 per cent by the end of 2015.
Lui said developers were unlikely to cut prices because of rising construction and marketing costs. He said production of the sales brochure for the Riva project required a nearly seven-fold increase in manpower because of the requirements of the Residential Properties (First-hand Sales) Ordinance that came into effect at the end of April.
"Each brochure costs about HK$1,000 to produce," he said.
SHKP apparently cut its asking prices for 156 flats at its Riva development on Monday.
The units were offered at prices ranging from HK$7,583 per square foot to HK$12,433 per sq ft, versus recent transaction prices of HK$9,216 per sq ft at the one-year-old One Regent Place in Yuen Long. The prices were also as much as 38 per cent below the HK$12,268 per sq ft average fetched at the first release of units in the Riva residential project in March last year.
Although the administration of Leung Chun-ying had increased land supply to cool the property market, it would be difficult for the government to achieve its annual housing target, Lui said. "Yes, flat supply will increase in future, but construction takes time."
The government says its land releases will supply 20,000 new flats per year for the next 10 years.
Lui rejected the suggestion that SHKP's avowed intention to offer new projects for sale every month indicated the developer was anxious to sell its inventory before demand dried up.
"We have seven or eight residential projects plus some commercial projects in the pipeline, each worth about HK$2 billion. Releasing a project for sale every month is unavoidable given all of that supply."