Land flipping on the rise among Hong Kong developers
February 22, 2018 - Hong Kong
Property developers in Hong Kong are accelerating their disposals of land bought from the government, suggesting they are keen to contain risks at a time when home prices in the city have surged to records, analysts told the SCMP.
In the past eight months, five developers have pocketed quick profits of more than HK$4 billion (US$511 million) from reselling three government sites to lower their risks should price rises begin to slow.
Such a series of land disposals is a rare move in Hong Kong’s real estate industry. It reflects vendors’ eagerness to cash in as fast as possible on the view that the growth in home prices may slow down over the next several years,” Alvin Cheung Chi-wai, associate director of Prudential Brokerage, told the Post.
Hainan-based conglomerate HNA sold earlier in February two residential parcels in Kai Tak for almost HKD15.95 billion to Henderson Land Development. The sale netted HNA around HKD1.7 billion in profit.
Home prices in Hong Kong are projected to rise anywhere between 5 percent and 10 per cent in 2018, down from 14 percent in 2017.
“Buying demand from investors is weakening as soaring home prices have compressed residential rental yields to just 2 per cent. It is not a very large difference from the saving deposit rate at banks,” Cheung said.
“The new buyers of these sites have shorter periods to finish their developments which means less flexibility in their pricing should the market encounter a sharp downturn,” said Lawrence Poon Wing-cheung, senior lecturer at City University of Hong Kong’s department of building science and technology.
Source: Property Report
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