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Property News Weekly Digest
2020/10/3
〈Macau Times, Oct 3, 2020〉THERE'S a saying in Hong Kong property circles that if the city's richest man, Li Ka-shing, is selling, you don't want to be the buyer.

Now, a group of investors who paid $5.2 billion for Li's stake in The Center almost three years ago - making it the world's most expensive skyscraper - is finding out why. After initially making quick profits flipping floors in the 73-story tower, the combination of anti-government protests, the coronavirus pandemic and escalating U.S.-China tensions has seen vacancies surge, rents drop and dealmaking dry up.

Just one sale has been made this year - at a 35% discount to early 2019 prices, according to property- -data provider Real Capital Analytics. Almost one-fifth of the building is empty - one of the highest vacancy rates in Hong Kong's sought-after central business district - and rents are down about 20% from a year ago.

"It was a reasonable investment decision back then," said Thomas Lam, an executive director at Knight Frank LLP.

Market prices were higher than the average cost the group paid, and flipping floors seemed easy, he said. "But now, as rental yields and office demand decline amid the worsening economy, buyers are much more reserved."When a group of local investors with colorful nicknames like "Minibus King" and "Queen of Shells" banded together to buy Li's 75% stake in late 2017, Hong Kong's office property market was riding high. Prices in Central had risen 20% in just under a year, according to Savills Plc, and the office vacancy rate in the district was just 2%. (CK Asset Holdings Ltd., Li's property arm, sold the other 25% of the tower in the years after it opened in 1998.) After the deal closed in mid- 2018, the group quickly divvied up the 47 floors, 402 parking spaces, office suites and retail outlets and started flipping them.

〈Asian Post, Oct 2, 2020〉China Evergrande Group (03333), the world’s most indebted property developer, has allegedly imposed a rigorous pay-cut plan in Hong Kong amid recent rumors saying that it was seeking a government bailout.

An Evergrande staffer told Apple Daily that the beleaguered company proposed a salary-reduction plan for its Hong Kong employees this month, with some managerial staff having to agree to cut up to 20% of their monthly wages.

The debt-laden company has hired more than 100 staff in Hong Kong since its listing on the city’s stock exchange in 2009, said the staffer, who spoke on condition of anonymity. In early September, Evergrande’s human resources department notified its staff one by one of the salary reductions, the source said.

It is currently unclear if the alleged salary cuts are related to the company’s alleged capital scarcity.

News about the company’s financial struggles started to circulate in mid-September. Last Thursday, Evergrande’s shares tumbled to a four-month low while its domestic bond closed at its lowest level since the company’s listing. The poor performance occurred after a leaked letter purportedly from within the company showed Evergrande calling for mainland authorities to support its A-share backdoor listing plan.

〈Ming Pao, Oct 1, 2020〉HK needs Greater Bay Area more than ever

AMID the pandemic-battered global economy and an unpredictable international situation, Hong Kong has to concentrate more on development efforts so as to overcome the adversities brought about by the pandemic and get on its feet again.

A practical and viable choice is setting the city's sight on the Greater Bay Area. From the business sector to the technological sector, there are views that Hong Kong should flexibly respond to the circumstances and prefer the easily accessible to the out-of-reach.

Making inroads into the Greater Bay Area is the big direction. However, the Hong Kong government's enterprise in this regard is obviously far from enough. In contrast to the mainland and Macao where the pandemic is under control, Hong Kong is still mired in the mud. The failure to implement the Hong Kong Health Code so far has obstructed people's travel between Guangdong, Hong Kong and Macao.

Nevertheless, there is still a lot of work to be done by the Hong Kong authorities on the policy level. They should not just sit back and wait until the end of the pandemic before making plans.

The Hong Kong government must speed up its negotiation with Guangdong and Macao so as to eliminate the various bottlenecks and formulate substantial development strategies for deepening co-operation.

〈Taipei Times, Sept 30,2020〉Investors in car parking spaces are looking north, betting on a strong rebound in the economy and increasing vehicle ownership in the Greater Bay Area to boost prices.

Among them is Hong Kong investor King Cho, who plans to spend up to 700 million yuan (HK$795.7 million) by the end of this year to add 7,000 such spaces especially in Guangzhou, Foshan and Zhuhai to his portfolio.

The founder of Guangzhou-based Vision Property said he was waiting for border restrictions to be lifted before he could move ahead with his plan.

Over the past five years, Cho has amassed some 3,800 parking spaces, mainly in Guangzhou and Foshan, valued at between 800 million yuan and 1 billion yuan.

"Major [bay area] cities [like] Shenzhen and Guangzhou will see a rebound in transaction volumes and prices," he said.

Market activity would pick up in the fourth quarter and reach nearly 80 per cent of last year's level after slowing considerably in the first quarter, Cho added.

〈The Standard, Sept 30, 2020〉Local developers are offering more homes next month, with CK Asset (1113) planning to launch luxury project El Futuro in Kau To Shan, offering 266 units sized between 470 square feet and 1,220 sq ft.

Meanwhile, Top Spring International (3688) and Chun Wo Development revealed the first price list of 128 Waterloo in Ho Man Tin, offering 50 units at an average price of HK$27,676 per sq ft after discount. The cheapest one, sized 342 sq ft, is priced at HK$7.83 million, or HK$22,889 per sq ft.

MTR Corporation (0066) also opened tenders for the Lohas Park package 13 property development, the final phase of the project. It will close on October 29.

MTRC said it has received 35 expressions of interest from developers. The valuation of the project ranges from HK$8.5 billion to HK$15.5 billion, or HK$5,500 to HK$10,000 per sq ft.

In other news, Henderson Land Development (0012) applied for the compulsory auctions of an old building on Sun Chun Street in Tai Hang, with a total valuation of nearly HK$50 million.

Lofter Group also acquired more than 80 percent shares in a building at 11 to 13 Nanking Street in Jordan for HK$267 million.