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Property Developer's Significant Price Drops

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  1. #1

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    Property Developer's Significant Price Drops

    Cheung Kong's marketing strategy of heavy home price cuts might be seen as sign of the long-awaited price turn in the overall market, but I tend to see new development prices as living on a planet of their own and only marginal to the secondary market.

    Cheung Kong's home price cuts 'will affect market' says analyst
    Saturday, 09 March, 2013,
    Sandy Li SCMP

    While observers are split over whether Cheung Kong's high-profile price-cutting strategy is a marketing gimmick to drum up sales, or a reflection of the belief of Li Ka-shing, the company's chairman, that the property market has peaked, one analyst said the price cuts themselves would have an effect on the market.

    Three weeks after the developer's controversial sale of all 360 hotel units at Apex Horizon in Kwai Chung at a low price of HK$5,400 per square foot, it took the lead again on Thursday and cut the prices of flats at its One West Kowloon project in Lai Chi Kok by 6 to 17 per cent.

    Justin Chiu Kwok-hung, an executive director at Cheung Kong, said the group's next project in Tsuen Wan would be launched at discounted prices.

    Chiu also said he expected home prices to fall 10 per cent this year.

    Cheung Kong plans to release a record 5,238 homes in the city and 2,500 on the mainland for sale this year, in an attempt to generate revenue of as much as HK$40 billion.

    Venant Chiang, an analyst at Jefferies Equity Research Asia, wrote in a report: "We conservatively estimate [the supply of new homes] amounts to 16,000 to 18,000 units this year. Cheung Kong's new supply alone accounts for about 30 per cent of our estimate. Therefore, its pricing strategy will have a meaningful impact on the market."

    Because of shrinking demand after a couple of rounds of policy tightening, the take-up rate for new supply is uncertain, which could potentially lead to deeper-than-expected price reductions, Chiang said.

    However, one developer, who requested not to be named, said Cheung Kong's price cuts were merely a marketing tactic.

    Sun Hung Kai Properties and Sino Land said they had no plans to follow suit with price cuts. Victor Tin Sio-un at Sino Land said: "Sales will be slow, but we still see solid demand in the market."

    David Ng Ka-chun, the head of China and Hong Kong research at Macquarie Capital Securities, said Cheung Kong was serious about raising its market share, as it planned to sell five projects worth HK$30 billion this year, the most in a decade.

    Last year, Cheung Kong ranked No1 for units sold and value. In 2011, it was No1 in terms of units sold but No2 in terms of value, behind SHKP.

    "The product mix of Cheung Kong should also be favourable in a down market," Ng said.

    Figures from Centaline Property Agency show Cheung Kong sold 3,300 units at an average of HK$7.9 million each last year, while SHKP sold 1,700 units at an average HK$13.4 million.

    On February 23, the government doubled stamp duty on the purchase of all properties sold for more than HK$2 million to as much as 8.5 per cent.

    Major lenders expect a rise in mortgage rates soon. HSBC and Standard Chartered said regulatory measures had raised the cost of the business.

    Chiang's report said: "If this happens, buyer demand will be hit again, given that end users are generally more elastic to cost of purchase.

    "On our estimate, a one percentage point increase in mortgage rate will lead to an over 12 per cent deterioration in affordability, which can be offset by around 15 per cent decline in home price."


  2. #2

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    i don't see any meaningful impact.

    prices in secondary market don't change much when there aren't even any sellers rushing to get out of their units.

    try calling any owner and ask if he would like to sell his unit at 10% discount, and that owner will probably hang you up or tell you to go F.... yourself. lol

    the thing that naysayers or wishful buyers don't understand is that current owners are not stressed at all. they can sit comfortably for a long time and be very stubborn on price negotiation. the current supply market has very few weaklings.

    cheung kong or any developer operates differently because their objective is to get rid of their units as quickly as possible. owners of secondary markets will not sell nor even put any listing on the market unless the price is favorable to them.


  3. #3

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    funny you talk about supply and demand because you clearly don't understand supply.

    there will be a REDUCTION of supply in secondary market if prices drop slightly in current conditions.

    but the only nonsense in this forum is that advice you've been giving to everyone to not buy any properties for the last 5 years as hong kong became the biggest property bull market in the world

    Last edited by zymu; 09-03-2013 at 05:37 PM.

  4. #4

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    but that supply is limited.

    it's like feeding a small slice to a crowd who needs dozens of pizzas.

    they're not working fast enough in the kitchen.

    Last edited by zymu; 09-03-2013 at 06:20 PM.

  5. #5

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    The only thing I can say is that a friend of mine has her flat on the market in mid levels. She had tons of people coming and several good offers before CNY. Not one visitor since CNY... However as is the case of many sellers, she's in no hurry to sell and not prepared to discount her price. Those who have to sell will probably have to cut prices though so I expect values to drop but probably not much unless there's a trigger that forces people to sell like higher interest rates or a SARS like event.


  6. #6

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    Original Post Deleted
    Can I borrow your transporter?

    I will certainly be interested in the new developments and the pricing achieved in Wanchai near the tram route. I regard that as a 'critical' location for affecting prices in Central, but new stuff way out in NT? Good for a couple of weekends of headlines but then it fades away and no-one cares.

  7. #7

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    I blame the Mainlanders.


  8. #8

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    Quote Originally Posted by pin:
    I blame the Mainlanders.
    Drink! (I've been neglecting my drinking game recently)

  9. #9

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    SHKP lowers asking price for luxury units
    Company releases first batch of Riva flats at about 18 per cent below expected target
    Saturday, 23 March, 2013,
    Sandy Li

    Sun Hung Kai Properties' release yesterday of the first batch of 50 flats at its luxury Riva residential project in Yuen Long underscored the weakening property market.

    At HK$12,268 per square foot, the average price at Riva is about 18 per cent lower than the original asking prices. SHKP previously said its target price tag for flats at Riva was HK$15,000 per square foot on a gross floor area basis...
    http://www.scmp.com/business/article...-luxury-units?

  10. #10

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    Oops!

    The property developer, Cheung Kong, says it will return all money to buyers of its controversial hotel project - the Apex Horizon in Kwai Chung.

    The decision follows an investigation by the Securities and Futures Commission. The company sold all 360 rooms of the hotel in February, raising HK$1.4 billion.

    It said it decided to scrap the sales after an investigation by the securities regulator. The SFC said the sale appeared to constitute a collective investment scheme that needed its approval.

    Cheung Kong disagreed, but said it would unwind all the transactions to avoid future legal disputes. It said all the money buyers had put down would be returned, plus interest and HK$10,000 to cover legal costs.

    Cheung Kong had said the hotel rooms could be used as residences -- but the authorities disagreed.

    10 char