〈Asian Post, May 5, 2018〉The most expensive real estate transaction ever, at HK$40.2b, is complete - here is the behind-the-scenes tale of how it all played out

On a sunny afternoon last month, a group of very wealthy men filed into the 28th-floor office of Hong Kong's richest woman at the One International Finance Centre skyscraper, which looks over the city's famed Victoria Habour.

Among them were Shimao Property Holdings founder Hui Wing-mau; Ma Ah-mok, the operator of Hong Kong's biggest fleet of minibuses; and two men who made their fortunes from pro ducing cassette tapes and compact discs.

They had come to Kingston Financial Group co-founder Pollyanna Chu Lee Yuet-wah's office to undertake an unusual ritual: they would pick ping-pong balls painted with numbers out of a hat to decide which of the 10 of them would get the first pick of the 73 storeys at The Center.

Six months earlier, several members of the group had agreed to pay HK$40.2 billion to buy The Center from businessman Li Ka-shing, a purchase that would go down as the world's most expensive real estate transaction.

It was a deal that had taken more than two years to close. Li's CK Asset Holdings had initially balked at a lower offer of HK$35 billion. A sale was only possible after the price was raised by 15 per cent, and the buyers used a consortium called CHMT Peaceful Development so CK Asset could deal with a single buyer.

The transaction had just been announced when it hit a snag: China Energy Reserve & Chemicals Group, which owned 55 per cent of CHMT, could not get its money past mainland currency regulators and had to drop out.

The consortium's remaining members had to scramble to find new investors before the deal's May 3 deadline, and take ownership of 75 per cent of a building with 1.22 million sq ft of office space, with tenants including Goldman Sachs.

CK Asset had sold 11 floors to Malaysian developer Guoco Group in 1997. Nine of the 11 floors were sold to Singapore's DBS Group Holdings a year later, while the 60th and 79th floors were sold in 1999, according to The Center's 2016 sales brochure.

〈Asian Post, May 4, 2018〉The government could quite easily tax developers hoarding completed flats, analysts and property consultants yesterday said, but if it stopped there and ignored homeowners doing the same thing, the policy would do little to ease the city's acute housing shortage.

Eddie Hui Chi-man, a real estate economics professor at Polytechnic University, said authorities could identify unsold new flats in developers' hands, and levy a tax "high enough to cause them pain". But he and Leo Sin Yat-ming, a property marketing professor at Chinese University, also stressed buyers who had left their flats empty should also be targeted, though identifying them would be challenging.

Government figures showed by the end of last year, 9,370 newly built flats in the world's most expensive property market were left unsold, accounting for 12 per cent of the 42,940 vacant flats in 2017.

Developers are believed to hold more than 40 per cent of vacant flats, with Sun Hung Kai Properties alone holding on to 1,000 units of available inventory.

On Thursday, Chief Executive Carrie Lam Cheng Yuet-ngor suggested the government was leaning towards adopting the tax policy, more than a month after Financial Secretary Paul Chan Mo-po revealed the measure was under consideration.

At Lam's monthly Legislative Council question-and-answer session, legal sector legislator Dennis Kwok asked if she would promise to quickly enforce the tax. Lam said she had a "positive attitude" towards the policy, but refused to give a timeline for when the tax might be imposed.

Hui said to encourage quick sales, the government could revise land sale contracts by adding a clause specifying a time limit for developers to sell all new flats.The tax might end up helping rich people to buy larger flats at a lower priceLeo Sin Yat-ming, Chinese University professorThomas Lam, head of valuation consultancy at inter national property firm Knight Frank, said in countries where vacancy tax was applicable to individual owners, authorities would check on utility bills, or encourage tip-offs from neighbours.

〈The Standard, May 3, 2018〉A higher prime rate, which sets the upper limits on mortgages, could dampen surging housing prices in the world's least-affordable real estate market.

Hong Kong property companies, such as Sun Hung Kai Properties (0016) and CK Asset Holdings (1113), are bracing for the first increase in the city's prime rate in more than a decade.

"Whenever a prime rate hike happens, it will cause the property market to rethink the sanity of paying HK$10 million for 200-square-foot apartments," said CLSA Ltd. analyst Nicole Wong.

"Interest rates in Hong Kong are all set to spike in the months ahead," DBS Bank Ltd. economist Samuel Tse wrote in a note to investors.

"The prime lending rate will likely reach 5.75 percent by end-2018 in anticipation of more rate hikes in the US this year," he added.

Ronald Man, a strategist at Bank of America Merrill Lynch in Hong Kong, says higher prime rates could end the bull run on house prices.

"Our house view is Hong Kong home prices will grow 5 percent this year, followed by a 15 percent correction in 2019-2020," he said.

To be sure, Hong Kong's property companies are probably better positioned than in the past to weather a prime increase, even if it does cool housing prices, which have already gained about 9 percent this year.

Hong Kong's biggest developers enjoy low debt levels and have so much liquidity that they are "capable of financing buyers themselves," if banks pull back, said Bloomberg Intelligence analyst Patrick Wong.

〈Asian Post, May 2, 2018〉House prices likely to remain stable following property regulation policies Land sales in major Chinese cities saw a significant increase in April, while the land premium rate stayed at a relatively low level, industry data showed.

In April, land sales in 50 big cities monitored by Centaline Group, a Hong-Kong based real estate agent, jumped 83.4 percent year-on-year to 284.2 billion yuan ($44.6 billion).

Seven first- and second-tier cities saw land sales exceed 10 billion yuan, with land revenue in Hangzhou totaling 17.9 billion yuan in April, up 237 percent year-on-year.

In the first four months, land sales in the 50 cities totaled 1.2 trillion yuan, up 48.8 percent year-on-year, according to Centaline data.

The land premium rate, which measures the amount that the highest-bidding property developers pay in excess of the starting land price, stayed at a relatively low level in the first four months.

The premium remained at around 10 percent in hot-spot cities, compared with about 30 percent on average during the past three years, according to Zhang Dawei, an analyst with Centaline Group.

“Thanks to government control measures, the land market has cooled to some extent,”Zhang said.

The transaction volume in many cities remained at a high level, especially in first- and second- tier cities, signaling a high willingness among property developers to snap up residential land, according to Zhang.

China’s property market, once deemed a major risk for the broader economy, cooled in 2017 amid tough curbs such as purchase restrictions and higher down payment requirements as the government sought to rein in speculation.

〈Asian Post, May 2, 2018〉Carrie Lam Cheng Yuet-ngor yesterday rejected calls for the government to forcibly take back an exclusive golf course and use it for housing development, saying to do so would backfire.?

Speaking at the Legislative Council's question and answer session, the chief executive brushed aside allegations of collusion with property developers, as she pledged to consider the public good over vested interests.

"You do not need to worry whether we have the sincerity, courage or determination … I have no responsibility to safeguard the vested interests," Lam said, responding to a question by lawmaker Alice Mak Mei-kuen.

Mak, from the Federation of Trade Unions, had questioned the government's decisiveness and courage in tackling the housing problem. Lam said: "In my governance ideology, there are no words for 'vested interests' - only 'public interest'."

A government-appointed task force recently began a public consultation on 18 options for easing the space-starved city's worsening housing shortage, with suggested development of the 170-hectare Fanling golf course at the centre of the debate.

The course is home to the exclusive Hong Kong Golf Club. Community groups insist the course should be razed to build housing, while vested interests, including about 2,000 rich and influential club members, oppose that proposal.

Democratic Party lawmaker Andrew Wan Siu-kin asked Lam: "Do you dare to promise Legco and the public … that once there is consensus over the 'big debate' on land use, you will say 'no' to the vested interests?"