Hong Kong Property: Scramble To Sell?29 June, 2011, 2:09. Posted by Zarathustra
Tags: Cheung Kong, Hang Lung Properties, Hong Kong, Real Estate, Sun Hung Kai Properties, Swire Pacific
Since the non-news of the possible resumption of Home Ownership Scheme (HOS) emerged, the market atmosphere deteriorated significantly.
It was quite a surprise even to myself, who have been among the earlier ones who turned bearish. The reason I saw it as a non-news is that, first off, we don’t know anything about it. And secondly, even if the government does plan to announce the resumption in October, the supply will come on stream only years later realistically speaking. Finally, I believe what the government really wants to do is to delay the plan as long as possible, hopefully that the property market corrects before it has to announce. And if the property market correct significantly enough after they announce the plan, they can ditch the plan. So realistically, I don’t really see why people should get so worried about HOS. If they are truly worried, there are many other risks factors to be worried about.
Anyway, as the Sun Hung Kai Properties (16.HK) launches the Imperial Cullinan near the Olympic Station (650 units), and as Hang Lung Properties (101.HK) has been rumoured to be selling the Long Beach right next to Imperial Cullinan (1234 units), we have some more big news just now. First off, Cheung Kong (1.HK) will be selling Lohas Park Phase 2c. According to media report, Cheung Kong has just obtain presale consent two days ago, and will be selling 1,168 units as early as next week. If all three developers are scrambling to sell within these few weeks, we will probably see the secondary property market doing into a further standstill.
Another big news is not related to residential properties, but commercial properties. Swire Pacific (A-share: 19.HK, B-share: 87.HK) disclosed a possible disposal of an investment property. Rumour circulating in the media suggests that Swire Pacific may be selling the Festival Walk to a Singaporean Mapletree Investment for HK$22 billion. If the deal comes through, it will be the largest single property transaction in Hong Kong history.
Remember the failed spin-off of Swire Properties (it was not listed at last, but if it was listed, its ticker would be 962.HK)? According to the listing document on May 2011, the property valuation by valuer suggested at the time that Festival Walk was worth close to HK$16 billion. Given the appreciation of property value over the past year, the rumoured consideration of HK$22 billion does not appear to be far off from the market price. Yes, it is a very expensive piece of asset and the consideration is very high, but that’s the market price. Curiously, the amount raised through this sale would be larger than the proposed listing, which would have raised HK$20.204 billion at maximum.
So after the rather disappointing land auction and series of bad news, property developers are now in full force selling. What does it mean? Well, you can say what you like, I would not possibly comment.