(HONG KONG) Hong Kong’s home sales fell to the lowest level in 14 months in June, as the city’s government tried to rein in rising prices with rules on new home sales.

Total sales of residential units fell to HK$33 billion (S$5.9 billion) last month from HK$42.8 billion in May, the Land Registry said on its website yesterday.

By volume, the number of residential units changing hands declined to 9,130 in June from 11,014 in May, according to the government department.

Hong Kong has been stepping up measures to curb home prices that have increased 8 per cent this year, adding to the 29 per cent advance in 2009.

Apart from raising stamp duty on luxury home transactions and increasing land supply, the government is also clamping down on developers’ sales tactics to boost transparency.

‘The fall is like a hiccup in the market in response to government’s rules on new home sales announced in April,’ Nicole Wong, a Hong Kong-based regional head of property research at CLSA Ltd, said yesterday in an interview.

‘There is no means for the government to reverse the imbalance resulting from short-term supply shortages,’ Ms Wong said.

Ms Wong expects home price in the city will rise 15 per cent for 2010.

Today’s sales from the Land Registry is a ‘lagging indicator’ of the property market as it showed data of transactions made in April and May, Ms Wong said.

The government asked developers to provide a show flat that will be in the exact same condition as when the home is built and ready for delivery, and to publish asking prices three days before starting to sell unfinished apartments, Financial Secretary John Tsang said on April 21.

Sun Hung Kai Properties Ltd, the city’s biggest developer by market value, on June 8 paid HK$10.9 billion for a residential site in the Ho Man Tin district.

The price, which beat a Bloomberg News estimate by 30 per cent, is the highest paid in a government auction in urban Hong Kong since the market peaked in 1997.

‘The record land sale in Ho Man Tin in June has boosted the housing market again,’ Buggle Lau, chief property analyst at realty company Midland Holdings Ltd, said in Hong Kong. ‘I expect the home sales volume will go up in July,’ he added.

Hong Kong’s home prices rose to the highest in five weeks, Centaline Property Agency Ltd said on July 2.

The index of existing home prices rose to 80.12 as of June 27, compared with 79.12 a week earlier, according to Centaline, one of the city’s biggest property agencies. — Bloomberg

Source: Business Times, 6 Jul 2010

(HONG KONG) New mortgage loans approved in Hong Kong in May rose by 34.3 per cent from a year earlier and increased 0.1 per cent in value terms from April, figures from the Hong Kong Monetary Authority (HKMA) showed.

New loans approved in May totalled HK$37.8 billion (S$6.74 billion), the HKMA said yesterday. Month-on-month figures are not seasonally adjusted.

Loan approvals for new property rose 0.7 per cent month-on-month in May, while loan demand for mortgages on existing property fell 4.5 per cent. Approvals for refinancing loans increased by 10.5 per cent against April.

Following is a summary of data from the authority for May compared with April: The number of new mortgage applications fell 11.1 per cent to 20,283 from the previous month’s 22,818.

The value of new mortgage loans drawn down increased by 12.7 per cent to HK$28.9 billion.

The outstanding value of mortgage loans increased 1.5 per cent to HK$675.6 billion.

The mortgage delinquency ratio and re-scheduled loan ratio were steady at 0.03 per cent and 0.06 per cent, respectively. — Reuters

Source: Business Times, 29 Jun 2010

(HONG KONG) Police are probing the controversial sale of luxury flats that fell through months after its developer said that one of them had set a world-record price, a report said yesterday.

The Sunday Morning Post, citing a Transport and Housing Bureau document, said that police had joined the probe into the sale after the government launched an investigation into the deal earlier this month.

A police spokesman could not be immediately reached for comment.

Property giant Henderson Land Development reported this month that the sale of as many as 20 out of 24 units at its exclusive 39 Conduit Road towers in the city’s Mid-Levels residential area had been cancelled. The scrapped deals included what was supposed to be the world’s most expensive apartment, a 6,158-square-foot duplex that Henderson said in October had sold for US$56.6 million.

Critics demanded a probe and asked why the cancellations came to light only eight months after the sales announcement, which helped hike prices for luxury residential flats in Hong Kong and stoked concerns about a property bubble.

Henderson has also been condemned for selectively numbering the floors on the 46-storey building as a ploy to attract Chinese buyers. The supposed 68th-floor duplex that snatched world-record price was actually on the 43rd and 44th floors, according to reports. It was so numbered because ’68′ sounds like ‘continuing fortune’ in Chinese and is considered lucky.

A Henderson official could not be immediately reached yesterday, but a spokeswoman told the Post that the company would cooperate with any police probe. — AFP

Source: Business Times, 28 Jun 2010

Henderson Land Development, the Hong Kong developer controlled by billionaire Lee Shau Kee, was questioned for a seventh time by the government over luxury apartment transactions that spurred efforts to cool home prices and a crackdown on marketing tactics.

The Lands Department asked the company to provide copies of title deeds and additional details on how it calculated the interest penalty for late payments, a spokesperson said. Henderson was given seven days to respond.

The Hong Kong government has been scrutinising developers’ sales techniques since Henderson’s October announcement it sold an apartment at the 39 Conduit Road project in the Mid-Levels district for a world-record of HK$88,000 ($15,300) per sqf. The company said the sales of 20 apartments in the complex collapsed after most buyers pulled out.

“The reason why the government is asking all these questions is they want to appear to the public they are tough” on developers’ selling tactics, Hong Kong-based shareholder activist David Webb said.

Source: Today, 24 Jun 2010

THE Hong Kong government said it is looking into the cancelled sales of Henderson Land apartments, which have pushed down the developer’s shares this week.

Earlier this week, Henderson announced that it would record a loss of HK$734 million (S$130 million) from the cancellation of sales of 20 luxury flats in Hong Kong, which would be reflected in its first-half results. The cancellations included a duplex unit that had fetched a global record price of HK$71,280 per square foot last October.

‘Any fraud or deception in property sales is totally unacceptable,’ the government said in a statement issued late on Thursday.

The government said it was concerned after only four out of 24 previously announced sales were completed, and it would not tolerate any ‘forged non-bona fide transactions’.

Regulatory and law enforcement agencies were looking into and following up on the case, the government said, without elaborating.

Henderson Land said it would cooperate with the probe. ‘We welcome the action and will provide all necessary information because we believe this will help us clarify to the public,’ said Henderson Land spokeswoman Bonnie Ngan.

On Thursday, Henderson Land vice- chairman Peter KK Lee, son of billionaire Lee Shau Kee, told Reuters that he expected no more sale cancellations here in the near term.

The cancellations led some research houses, such as DBS, Goldman Sachs and JPMorgan, to either downgrade the stock or lower their price targets. — Reuters

Source: Business Times, 19 Jun 2010

(HONG KONG) Billionaire Lee Shau-kee’s Henderson Land Development Co said that the sale of 20 luxury apartments had collapsed, ending HK$2.67 billion (S$478.2 million) in deals that sparked a government inquiry and fuelled efforts to rein in home prices.

Most buyers pulled out of the 39 Conduit Road project in the Mid-Levels district, Henderson said in a filing with the stock exchange on Tuesday, responding to government demands for more information on the sales of 24 units. It said that it had sold four of the units and would record a charge of HK$734 million in its half-year results.

The failure of the sales, including a unit that would have set a world record price of HK$88,000 per square foot, marks a setback for Hong Kong’s second-richest man as regulators try to cool a surging property market. Mr Lee had said in March that buyers could have more time to complete the deals.

The cancellations are ‘quite a negative surprise’, said Raymond Ngai, an analyst at JPMorgan Chase & Co. ‘Those record prices they reported earlier, I doubt they’ll be able to sell them at those prices again . . . To sell them for around HK$30,000 per square foot is still quite possible. But selling an apartment at HK$70,000 a square foot is just too out of line with the market.’

‘We won’t be cutting prices,’ Mr Lee told reporters on Tuesday. ‘Maybe we’ll make more money when we sell these apartments again.’

The company added that it was confident in selling the apartments because of the ‘prestigious’ location, and will be ‘sparing’ with sales.

Henderson announced the sale cancellations after the stock market closed on Tuesday. The market was closed yesterday for a public holiday.

Responding to an outcry over rising property prices last year, Hong Kong raised downpayments on luxury homes to 40 per cent from 30 per cent and clamped down on marketing techniques.

The HK$439 million apartment that Henderson had said was sold for a record – based on usable space excluding common areas – was listed on the 68th floor when it was actually on the 45th. Floor numbers are often skipped in Hong Kong to avoid those considered unlucky.

In a March 30 release, Henderson included sales of the 24 apartments plus one that was sold in a completed transaction as part of its revenue of HK$15.2 billion for the 18 months ended December 2009.

The total price of the 20 apartments whose sales collapsed came to HK$2.67 billion, Henderson spokeswoman Bonnie Ngan said yesterday.

The government responded to Henderson’s filing, saying that ‘clear market information’ is important to the city. ‘The government is determined to create a fairer and a more transparent environment for flat purchasers.’

Home prices have risen 5.7 per cent this year, adding to 2009′s 29 per cent advance and raising concerns that the market is overheating. Builders often sell apartments before they are completed, drawing in customers by showing models of the homes.

The government this month tightened rules on new home sales, including the implementation of unfurnished show apartments and asking developers to disclose properties sold to their own executives.

Financial Secretary John Tsang in February announced higher stamp duty on luxury properties and pledged to raise the supply of land as he wants to reduce the risk of ‘a property bubble’ and keep housing affordable. — Bloomberg

Source: Business Times, 17 Jun 2010

HONG KONG: Hong Kong officials said yesterday they will look into the controversial sale of a luxury flat that fell through months after its developer said it had snatched a world-record price.

Property giant Henderson Land Development revealed on Tuesday that the sale of 20 luxury apartments collapsed, ending HK$2.67 billion (S$480 million) in deals that sparked a government inquiry and fuelled efforts to rein in home prices.

The scrapped deals included what was supposed to be the world’s most expensive apartment, a 6,158 sq ft duplex that Henderson said last October was sold for US$56.6 million (S$79 million), or a record price of HK$88,000 per sq ft.

Most buyers pulled out of the 39 Conduit Road project in Hong Kong’s Mid-Levels district, Henderson said in a filing to the stock exchange yesterday, responding to government demands for more information on the sales of 24 units.

Henderson said it has sold four of the units and will record a charge of HK$734 million in its half-year results.

Critics demanded a probe into the collapse and asked why the cancellations came to light only eight months after the announcement of the sales, which helped hike prices of the city’s luxury residential flats and stoked concerns about a property bubble.

A government spokesman said yesterday it would look into the matter ‘to consider the next step’.

Billionaire tycoon Lee Shau Kee, chairman of Henderson and Hong Kong’s second-richest man, told reporters he was not bothered by the scrapped deals. ‘I may be able to sell them for more,’ the South China Morning Post quoted him as saying.

The cancellations are ‘quite a negative surprise’, said Mr Raymond Ngai, a Hong Kong-based analyst at JPMorgan Chase.

‘Those record prices they reported earlier, I doubt they will be able to sell them at those prices again,’ he said.

Henderson has also been condemned for being unscrupulous and misleading by selectively numbering the floors on the 46-storey building as a ploy to attract Chinese buyers.

The supposed 68th-floor duplex that snatched the world-record price was actually on the 43rd and 44th floors, according to reports. But it was so numbered because ’68′ sounds like ‘continuing fortune’ in Chinese and is considered lucky.

AGENCE FRANCE-PRESSE, BLOOMBERG

Source: Straits Times, 17 Jun 2010

Demand for homes seen withstanding govt efforts to cool property market

(HONG KONG) The Hong Kong government’s HK$10.9 billion (S$1.98 billion) sale of a residential site at a public auction beat estimates and showed that home demand is withstanding efforts to cool the market

Potential home purchasers should consider their ability to pay before taking out mortgages, Financial Secretary John Tsang said yesterday in the government’s latest effort to discourage a bubble forming.

‘Citizens should consider the affordability before buying houses,’ Mr Tsang told reporters.

Sun Hung Kai Properties Ltd, the world’s biggest developer by market value, on Tuesday won the one-and-a-half hour bidding for the Ho Man Tin district site that was estimated at HK$8.41 billion, according to the median of seven analysts surveyed by Bloomberg News.

At HK$12,540 per square foot, it is the highest price paid in a government auction in urban Hong Kong since the market peaked in 1997, said Centaline Property Agency Ltd.

Home prices have risen 41 per cent since the end of 2008, prompting the government to tighten downpayment requirements for luxury homes in October to curtail speculation after record low interest rates fuelled the surge. Mr Tsang on May 12 pledged to keep boosting land supply.

‘The above-expectations bidding price shows that the developers hold a positive outlook on urban sites for luxury homes, as currently it is obvious the supply for luxury homes is not sufficient,’ Wong Leung Sing, an associate director of research at Centaline, one of the city’s biggest real estate agencies, said by phone on Tuesday.

The Centa-City Index, a measure of Hong Kong’s home prices, last week fell 1.44 per cent, its biggest weekly drop in more than 18 months.

Hong Kong may add as many as 60,000 homes in three to four years, Mr Tsang has said.

The price ‘was not cheap but still reasonable’, Fiona Wan, a spokeswoman at Sun Hun Kai, said by phone after the auction. The company expects to invest HK$18 billion to develop the site ‘into a luxurious residential area’. The estimates ranged from HK$7.15 billion to HK$9.8 billion.

Home prices in Hong Kong rose the most among the world’s major markets in the fourth quarter, property adviser Knight Frank LLP said in April. Average prices climbed almost 28 per cent from a year earlier in the city, while in China they advanced 25 per cent, a global index compiled by the London-based broker showed. They rose 3.4 per cent in the UK and fell 3.1 per cent in the US, according to the April 21 survey.

Hong Kong luxury home prices may rise 20 per cent this year as the economy expands and supply remains limited, real estate broker CB Richard Ellis Group Inc said in January. Luxury homes in the city are defined as those costing at least HK$10 million or bigger than 1,000 square feet (93 square metres).

The price per square foot for Ho Man Tin, a record for a site to build apartments in the Kowloon area, highlights demand for luxury homes on the other side of Victoria Harbour from the Central business district. Financial institutions including Morgan Stanley and Credit Suisse Group AG have moved into International Commerce Centre in the West Kowloon district.

‘At this price, the unit price would be as high as HK$15,000 to HK$16,000 per square foot,’ said Adrian Ngan, an analyst of CCB International Securities Ltd. ‘I expect the gap between luxury and mass apartments would widen after this land sale.’

New apartments in the district, which include those at projects such as Cheung Kong (Holdings) Ltd’s Celestial Heights and New World Development Co’s Wylie Court, are selling for about HK$12,000 to HK$13,000 a square foot, according to Alnwick Chan, executive director at Knight Frank.

The family of billionaire Lee Shau Kee, who controls Henderson Land Development Co, on May 18 paid HK$1.82 billion for a 53,350-square-foot plot of land on the Peak in an auction of non-government land. On a per-square-foot price of HK$68,200, the land was the city’s most expensive in an auction, Jones Lang LaSalle Inc said after conducting the sale.

The average price of HK$12,540 psf paid for Ho Man Tin is the highest for an apartment site in a government auction since 1997, when Chinachem Group bought a parcel in Hong Kong Island’s Repulse Bay area for HK$16,256 psf. It is the first time the government has sold a site for more than HK$10 billion since March that year, when a group led by Sino Land Co paid HK$11.8 billion for a site in the Siu Sai Wan district in eastern Hong Kong Island.

The Ho Man Tin plot has a total area of 16,151 sq m and building area of 869,000 sq ft. — Bloomberg

Source: Business Times, 10 Jun 2010

Developers expected to pay about HK$8.4b for site

(HONG KONG) Hong Kong developers may pay HK$8.41 billion (S$1.5 billion) for a residential site at a government auction today, as some analysts cut their estimates after two previous land sales missed forecasts and apartment prices fell in the last two weeks.

Estimates for the site in Ho Man Tin district ranged from HK$7.15 billion to HK$9.8 billion, based on seven analysts surveyed by Bloomberg News. Three of the analysts either cut their estimates over the last two weeks or waited longer than usual before publishing forecasts.

The Centa-City Index, a measure of Hong Kong’s home prices, last week fell 1.44 per cent, its biggest weekly drop in more than 18 months, in the wake of the government’s May 12 pledge to keep boosting land supply as it tries to cool the property market. Hong Kong may add as many as 60,000 homes in three to four years, Financial Secretary John Tsang said yesterday.

‘We expect developers to be quite cautious at this auction,’ said James Cheung, a director at the surveyor unit of Centaline Properties Ltd, one of the city’s largest real estate agencies. ‘On the other hand, this is a quality site and after sitting on the sideline at the last two auctions, some of the big players may be ready to move in again.’

Home prices in the city have risen 41 per cent since the end of 2008, spurring concern that housing is out of reach of ordinary residents. The Hang Seng Property Index, tracking six of Hong Kong’s biggest developers, fell 2.1 per cent today to extend this year’s decline to 14 per cent, underperforming the 11 per cent drop in the Hang Seng Index.

Midland Holdings Ltd, Hong Kong’s biggest publicly traded real estate agency, last week cut its estimate for tomorrow’s auction by about 10 per cent to HK$9.8 billion, according to Alvin Lam, an executive director at the company’s surveyor arm. The previous forecast was done in early April, he said.

The site on Kowloon peninsula will be the third piece of land auctioned by the government this fiscal year. It has a total area of 16,151 square metres (174,000 square feet) and building areas of 869,000 sq ft.

The developer who buys the site will likely build between seven and 14 blocks of apartments with 25 to 31 stories each, according to Alnwick Chan, executive director at property consultant Knight Frank LLP. The project will probably sell for about HK$15,000 per sq ft when it is completed, he said.

The first government auction of this fiscal year, conducted on May 11, fetched HK$3.42 billion for a site on Lantau Island, a third less than the median HK$4.75 billion estimate of three surveyors compiled by Bloomberg. Nan Fung Development Ltd, a privately held developer controlled by billionaire Chen Din Hwa, outbid only two other builders in the auction that analyst Adrian Ngan of CCB International Securities Ltd described as ‘a slam’ on the property market.

Two weeks later, a subsidiary of Henderson Land Development Co, controlled by billionaire Lee Shau-kee, bought a site in the city’s northern Fanling area for HK$1.33 billion, shy of the HK$1.37 billion median estimate of four surveyors.

On May 28, MTR Corp, the government-owned subway operator, said it was withdrawing the tender for a residential and commercial project atop one of its subway stations, without giving an explanation.

‘Mega-builders’ such as Sun Hung Kai Properties Ltd and Cheung Kong Holdings Ltd may have more interest in the Ho Man Tin site because of the high price it is expected to fetch, said Centaline’s Mr Cheung.

New apartments in the district, which include those at projects such as Cheung Kong’s Celestial Heights and New World Development Co’s Wylie Court, are currently selling for about HK$12,000 to HK$13,000 psf, according to Knight Frank’s Mr Chan.

The Lands Department is one of Hong Kong’s largest suppliers of unoccupied land for building. Developers trigger auctions from a list of available sites by promising to pay a minimum amount.

Today’s auction will be followed by another one on July 28 for a site on Mount Nicholson in the Peak district, according to the Lands Department website.

Henderson’s Mr Lee and his family on May 18 paid HK$1.82 billion for a 53,350 sq ft plot of land on the Peak in an auction of non-government land. On a psf price of HK$68,200, the land was the city’s most expensive in an auction, auctioneer Jones Lang LaSalle Inc said. — Bloomberg

Source: Business Times, 8 Jun 2010

It is second sale to fetch less than what surveyors had forecast

(HONG KONG) A building site in Hong Kong sold for HK$1.33 billion (S$240 million) yesterday, the second government auction this year that failed to meet surveyor forecasts as the city releases more land to ease concern about a property bubble.

The government auctioned an 8,900 square metre site in the Fanling area of the New Territories in northern Hong Kong that was forecast to fetch HK$1.32 billion to HK$1.45 billion, with HK$1.37 billion the median price, according to estimates of four surveyors compiled by Bloomberg.

Hong Kong’s home prices have jumped 41 per cent since the end of 2008, spurring concerns that affordable housing is out of reach of ordinary residents. Hong Kong’s government on May 12 pledged to keep boosting land supply as it tries to cool the property market, a day after its first auction of the fiscal year fetched almost a third less than surveyors’ estimates.

‘There could be more government policies coming as it shows determination to bring down prices,’ said Alnwick Chan, executive director at property consultant Knight Frank LLP before the auction.

Developers must build a minimum gross floor area of 34,290 square metres on the Fanling site.

Fanling doesn’t offer sea views and is near an industrial estate, unlike the previous auction in Tung Chung, said James Cheung, director of Centaline Surveyors, a unit of one of the city’s biggest property agencies. He estimated that Fanling would sell for HK$1.32 billion, 16 per cent lower than his original estimate of HK$1.57 billion prior to the Tung Chung sale.

The first auction of this fiscal year, conducted on May 11, fetched HK$3.42 billion, a third less than the median HK$4.75 billion estimate of three surveyors.

Nan Fung Development Ltd, a privately held developer controlled by billionaire Chen Din Hwa, outbid only two other builders in the auction that analyst Adrian Ngan of CCB International Securities Ltd described as ‘a slam’ on the property market.

Developers can build a maximum of 131,000 square metres of private residences on the site in Tung Chung on Lantau Island.

Developers are more likely to build homes with two or three bedrooms on the site, said Alvin Lam, executive director of Midland Surveyors Ltd. Prices of homes in the area are selling at an average of HK$3,500 a square foot, he said.

Yesterday’s auction was triggered after the government received a minimum guaranteed bid of HK$1.05 billion, it said on April 16. The Hong Kong government sells land through auctions only after developers promise to pay a minimum amount, part of an undisclosed reserve price.

Hong Kong is auctioning a site in Ho Man Tin in Kowloon on June 8 and Mount Nicholson on the Peak on July 28. MTR Corp, the government-owned subway operator, will finish taking bids for a separate site in Kowloon today.

Martin Lee, the youngest son of real estate tycoon Lee Shau-kee, paid a record price for land on the Peak, the city’s most expensive residential area, on May 18.

Mr Lee, vice-chairman of Henderson Land Development Co that is controlled by his father, paid HK$1.82 billion for a 53,350 square foot plot of land on the Peak in an auction of non-government land. On a per-square-foot price of HK$68,200, the land was the city’s most expensive in an auction, auctioneer Jones Lang LaSalle Inc said. — Bloomberg

Source: Business Times, 25 May 2010