Hong Kong tycoons share their pessimism on outlook, empathise with retailers rocked by hard times
One day after Hong Kong’s richest man warned that Hong Kong has been experiencing some of its toughest economic challenges in two decades, one other property heavyweight weighed in with a note of pessimism.
New World Development chairman Henry Cheng Kar-shun offered up his own bleak view on the retail outlook in Hong Kong.
“The decline in inbound tourism, weakening local consumption sentiment as well as the weakening economic outlook result in a dim outlook in the retail industry this year,” said Cheng, who spoke after the special general meeting on the company’s proposal to take its Hong Kong-listed mainland property unit New World China Land private.
Cheng’s comment came just one day after Li Ka-shing, the city’s richest man, said that the current downturn in property and retail sales was “worse” than during the SARS epidemic in 2003.
Cheng of New World Development refused to comment whether or not the current economy is experiencing some of its harshest conditions in two decades, but he left little doubt about the struggle some shopkeepers are facing. “The retail industry is really bad,” he said.
The city’s total retail sales for the month, provisionally estimated at HK$43.6 billion, dropped by 6.5 per cent year on year, smaller than declines of 7.8 per cent and 8.5 per cent in November and December respectively, according to government data released this month.
Meanwhile, the city’s leading property developer Sun Hung Kai Properties (SHKP) on Friday surprised the market by offering its luxury residential project, Ultima phase two development, in Ho Man Min, significantly lower than a nearby project launched early this week.
The first batch of 55 units at Ultima will be priced at HK$18,436 to HK$55,180 per square foot, according to the developer’s price list. Factoring in a maximum discount of 11.5 per cent, the selling price would be as low as HK$16,316 per square foot.
The price is about 28 per cent lower than Cheung Kong Property’s The Zumurud in Ma Tau Kok which were offered at a lower than expected HK$22,671 per square foot up. CK Property released 50 units at The Zumurud on Wednesday for tender.
Victor Lui Ting, deputy managing director of SHKP said prices for Ultima phase two development were the same as phase one.
“Prices just reflect units located on different floors and different view,” he said.
SHKP will also provide home loans of up to 82.5 per cent of the flat value to buyers and no income proof was needed to drum up sales. The loan will be for a 20-month term.
SHKP said the plan aims to assist up-graders to enter the market.
The cheapest unit at Ultima phase two development is a 1,412-sq-ft unit on the 5th floor at Block Three costing HK$23.03 million, or HK$16,316 per square foot. The most expensive is a 2,019-sq-ft unit on the 16th floor of Block 1 for HK$98.59 million, or HK$48,834 per square foot.
Developers are ramping up marketing efforts for high-end properties ahead of a big batch of new releases in coming weeks and on the heel of a government land tender on Tuesday that came in well below expectations.
“It reflects developers are in a hurry to dispose of their projects. Most of them want to push sales at the expense [to the developer] of price and profit,” said Alfred Lau, an analyst at Bocom International.