| HONG KONG, March 26
HONG KONG, March 26 A series of tightening
measures have put the brakes on Hong Kong's overheated property
sector, forcing developers to cut prices and prompting a warning
from Asia's richest man Li Ka-shing: speculators stay away.
Developers say a sixth round of cooling measures imposed
last month to rein in prices and to avoid an asset bubble are
now having an impact on sales.
"If you are speculating, I would suggest that you stay away
in such a volatile market because no one knows what will happen
next," Li told a news conference after his company Cheung Kong
(Holdings) Ltd announced its first annual decline in
net profit in five years.
"Look at your pocket first and don't take risks," Li said.
In late February, Financial Secretary John Tsang imposed a
new round of steps to curb prices that have doubled since 2008,
saying they were needed to keep the potential economic risk from
spreading in the financial hub.
The new measures included higher stamp duties and home loan
curbs on property transactions.
In the first three weeks of March, second-home transactions
plunged to their lowest since the outbreak of Severe Acute
Respiratory Syndrome (SARS) in 2003, when Hong Kong's real
estate market hit an all-time low, according to data from
property agent Midland Realty.
"We only recorded two deals from the 10 large-scale
residential estates during the past two weeks," said Wong Leung
Sing, analyst at Centaline Property Agency. "It has never been
"The market might head in two different directions: Prices
stay the same with a plunge in transactions, or prices will just
collapse," Wong said, adding that home prices may drop as much
as 20 percent in the second quarter.
Sun Hung Kai Properties Ltd, the world's No.2
property company by market value, has also cautioned about the
impact of the tightening measures and lowered its sales target
for this financial year by 9 percent.
Analysts say Cheung Kong has been forced to cut prices to
boost sales in a lethargic market.
Cheung Kong, Hong Kong's second-largest property developer
after Sun Hung Kai Properties, cut the price of a new project in
the city by 6 to 17 percent, according to Macquarie Equities
Cheung Kong on Tuesday logged a 30 percent fall in 2012 net
profit from a year earlier, although the total net profit of
HK$32.2 billion ($4.1 billion) beat analysts' expectations.
Over the past three years, property prices have surged in
Hong Kong, one of the world's most expensive property markets,
on ultra-low interest rates, tight supply and abundant
CORRECTION ON THE CARDS
Along with government tightening, a number of banks raised
mortgage rates by 25 basis points earlier this month.
"We think the rate hike has psychological impact more than
actual impact to buyers," Dennis Wu, research analyst at Phillip
Securities, wrote in a note last week.
Wu said a big drop in property prices in the past was only
triggered by major events, such as the financial crisis in 1997
and the SARS outbreak in 2003.
"But in view of property prices at historically high levels,
government damping non-user demand and some property developers
offering a price discount, we maintain a 5 to 10 percent
reasonable correction forecast for 2013 property prices."
Despite signs of slowdown, the Centa-City Leading Index, a
widely used indicator of the city's residential price trends, is
now at a record 123.7. That's 1.7 percent higher than
Property developers in the Chinese special administrative
region have so far seen limited impact from ongoing government
On Monday, Henderson Land Development Co Ltd
recorded a 28 percent year-on-year rise for 2012 underlying
profit, while Agile Property Holdings Ltd's net profit
rose 22 percent during the same period.
Henderson said in statement the cooling measures had
resulted in a moderate downtrend in property prices and a
drastic drop in property transactions.