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Property News Weekly Digest
2018/12/1
〈Asian Post, December 1, 2018〉Prices of lived-in homes in Hong Kong dropped 2.4 per cent in October. That means home prices have slumped 3.6 per cent in total after peaking in July following a 28-month rally starting in April 2016.

The price index of used homes fell to 380.3 in October from 389.5 in the previous month, a much sharper decline than the 1.3 per cent slide in September, and the 0.03 per cent dip in August, according to data released by the government's Rating and Valuation Department yesterday.

Three consecutive monthly movements in the same direction constitute a trend, according to some analysts. Thus, the latest numbers are significant for property watchers, developers, owners, buyers and renters.

"It is dropping faster than we expected," said Derek Chan, head of research at Ricacorp Properties. "If an owner does not reduce his asking price, it will be very difficult at this moment to sell his apartment. We see some have cut their prices by as much as 20 per cent."

Centaline Properties on Thursday brokered the sale of a 499 sq ft unit at Grande Yoho in Yuen Long for HK$6.98 million. It was not only almost 18 per cent lower than the asking price of HK$8.5 million, but also HK$112,000 less than what the seller paid for the flat in 2016.

The drop in home prices comes amid a rise in mortgage rates, supply and concerns about the US-China trade war.

Also, the looming vacancy tax is prying long-held flats from Hong Kong developers who kept them locked away for future appreciation riches. Some flats had been hoarded for up to 10 years. Developers are also offering steep discounts on new flats and other incentives to unload properties amid fears of a deepening downturn in the city's housing sector.

〈The Standard, November 30, 2018〉The Shenzhen property tycoon who agreed to pay HK$2.1 billion for Hong Kong's most expensive mansion on The Peak says he will take possession of the property a year earlier, quelling talk that the deal was in trouble.

The deal was now expected to be completed by the first quarter of next year, or 12 months ahead of the original schedule, without interior fittings and other finishing works, said Chuang's Consortium International, the builder of the house at 15 Gough Hill Road.

The deal will come at a discount of HK$70 million, or 3 per cent off the original price. The price cut lowers the cost to HK$2.03 billion, raising speculation that the deal was in trouble.

In June 2016, Chen Hongtian, chairman of Cheung Kei Group which invests in property, hotels and finance firms, agreed to pay a record HK$2.1 billion for the 9,212 sq ft luxury house.

Under the original agreement, the buyer would pay 80 per cent, or HK$1.68 billion, in cash, with the remaining 20 per cent to be paid by the transfer of Shenzhen property.

"The price cut is because I do not require the developer to provide fittings and finishing works. I will do the decoration at my own cost," Chen told the Post on Thursday. "I will pay the balance of the amount and complete the deal one year earlier than the previous arrangement. It is funny if the market still thinks that I'm in financial trouble."

Asked why he wanted to complete the deal early, Chen said: "I would like to move in earlier."

Chuang's Consortium said it had received HK$1.05 billion, of which HK$420 million was by way of transfer of mainland property, as of November 26. The property comprises floors 1-3 of Peng Building on Wenjin North Road in the Luohu District of Shenzhen.

〈China Daily, November 30, 2018〉Transactions in the primary residential property market slumped 68 percent month-on-month to 260 deals as of November 21, compared to the same period in October - blamed on the cloudy outlook for the Sino-US trade war and stock market fluctuations.

One business insider predicted the first-hand home market to record a total of 600 transactions for the whole of November - reflecting a decline for three consecutive months - because no new eye-catching projects are being launched.

Compared to the total number of 1,120 primary home sales for all of October, this month's projected 600 deals would be 46 percent lower, and 72 percent lower than the total 2,200 transactions in February, the peak period so far in 2018.

The secondary market, meanwhile, also saw a drop in transactions, with the number of 1,010 as at November 21 down 8.2 percent from the first 21 days of last month.

Among primary projects that performed relatively better in November, Reach Summit in Yuen Long saw 90 deals, while One East Coast in Yau Tong, and The Horizon in Pak Shek Kok each recorded more than 20 sales.

The number of unsold units in completed projects jumped 20.8 percent to 11,514 in October from September, hitting a new high since the Residential Properties (First-hand Sales) Ordinance came into effect in April 2013.

Chan Kwan-hing, managing director at property agent Qfang, said the glut of unsold completed flats is due to the general slowdown in sales and more projects being launched. But he expects the price reduction pressure to be relatively modest, as the number of unsold units in completed projects still remain at a fairly low level.

〈China Daily, November 29, 2018〉Jiayuan International (2768) and Stan Group have released their first price list for their joint venture T Plus project in Tuen Mun, which offers some of the smallest units in Hong Kong, with the tiniest and cheapest unit costing HK$2.85 million for 131 square feet.

The first batch of 73 apartments, with sizes ranging up to 416 sq-ft two-bedroom flats, is priced at an average of HK$16,937 per sq ft. The most expensive unit costs HK$9.23 million, or HK$22,327 per sq ft.

However, the project's smallest 128-sq-ft flat has yet to be put on the market. The nano-flat development is expected to be completed next year.

Meanwhile, transactions in the primary home market have slowed this month, with only 310 sales as of yesterday - the lowest since January 2016, according to Centaline Property.

Centaline also said home prices are expected to fall in the fourth quarter, with an 8 percent drop in December, amid uncertainties brought by the Sino-US trade war.

Figures from JLL research showed that the first day sell-through rates for newly launched mass residential projects averaged out to only 51 percent in October, compared with an average of 97 percent in January to September.

According to government data released in October, transaction volumes in primary market exceeded those of the secondary market by 23 percent in September, the first time this had occurred since November 2015, when the housing market temporarily softened.

Far East Consortium International (0035) executive director Hoong Cheong-thar said property prices will still see a rise for 2018, although they have dropped a lot recently

〈Asian Post, November 28, 2018〉Hong Kong topped the list for commercial property transactions in Asia in the first nine months of this year, but deals started to slow down in the third quarter as investors weighed the impact of the US-China trade war, rising interest rates and lower yields, according to data provider Real Capital Analytics.

Transaction volume in the third quarter stood at US$3.1 billion in the city, nearly 25 per cent lower than the US$4.1 billion in the same period last year.

Overall commercial deals jumped 65 per cent to US$22.99 billion in the first nine months of this year from US$13.95 billion a year earlier, the report said, with office property transactions surging 169 per cent to US$13.59 billion in the first nine months.

"For the past decade the Asia-Pacific real estate investment market has been characterised by rising prices, enabling capital gains for most players," said Petra Blazkova, senior director for Asia-Pacific at Real Capital Analytics.

"[But] Hong Kong's mega deals of the past appear to be giving way to a plateauing market. This is not surprising after an astonishingly strong run."

The report also noted a weaker pipeline of transactions, with only US$6.8 billion worth pending in the final three months of the year.

"With property yields at historic lows and tighter financing conditions looming activity seems to be shifting into a lower gear as investors determine whether the next stage of the investment cycle is on the horizon," Blazkova said.