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Property News Weekly Digest
2020/11/7
〈Asian Post, Nov 7,2020〉Lee Shu Kam says stock market and property excitement amid economic woes and rising unemployment lay bare a widening wealth gap in an increasingly warped society

October told a tale of two Hong Kongs, judging by a swirl of seemingly conflicting economic headlines. In a month when the city's coronavirus-battered economy sent the unemployment rate to a 16-year-high of 6.4 per cent, the high drama was Cathay Pacific's decision to slash 8,500 positions and fold its regional Cathay Dragon brand.

In a parallel universe, stock market excitement bubbled over before Chinese fintech company Ant Group's planned US$35 billion dual listing in Hong Kong and Shanghai was shelved at the last minute. Meanwhile, in a property market frenzy, a new housing estate in the New Territories had the best response from potential buyers since 1997 - applications for the first two batches of flats released were oversubscribed by almost 60 times.

Built atop an MTR interchange, with the draw of a large shopping centre, flats in the new project are priced at an average of more than HK$20,000 per sq ft, which is competitive even against second-hand mass residential properties in Sha Tin.

While the low interest rates and easing of pandemic fears would have helped the sales, the fact remains that a glut of flats released elsewhere before the Covid-19 outbreak in January is still largely unsold.

〈China Daily, Nov 6,2020〉Chinachem denies discussion with US consulate over temporary office lease

Property developer Chinachem Group has denied a report that it held discussions about leasing temporary office space to the United States Consulate General in Hong Kong.

The consulate was rumored to have approached Chinachem about renting an office at the One Hennessy building in Wan Chai.

Local news media HK01 earlier reported that the consulate had been looking for a temporary office in Central and Admiralty for the past three months without success. Owners were worried about the political sensitivity amid worsening Sino-U.S. tensions, and would not lease to the consulate despite having vacant office space in the area. Vacancies in Central are at a ten-year high of 6.8% according to the most recent data.

The U.S. has plans to renovate government-owned properties in Hong Kong, including the consulate on Garden Road, a consular spokesperson said. The renovation will require the consulate to temporarily relocate some of its employees.

The State Department’s Bureau of Overseas Building Operations will identify alternative space to lease that meets the consulate’s operational needs, the spokesperson said. The consulate cannot comment on the specifics as it is an ongoing process in its very early stages, the spokesperson added.

The U.S. consulate in Hong Kong was established in 1843, with its original site at 9 Ice House Street in Central. It moved into the current site in the late 1950s. In 1999, the U.S. government obtained a 999-year lease for HK$44 million (US$5.67 million).

〈China Daily, Nov 5, 2020〉China is expected to have attracted a total of $690 billion in foreign direct investment during the 13th Five-Year Plan (2016-20) period, and will offer its pilot free trade zones greater capacity to attract more global investment over the next five years, government officials said on Thursday.

The Ministry of Commerce is currently compiling a plan for the utilization of foreign capital during the country's 14th Five-Year Plan (2021-25), said Zong Changqing, director-general of the ministry's department of foreign investment administration.

He added that the government will steadily promote the growth of its FTZs, the Hainan Free Trade Port and national level economic development zones to maximize their role as the 'main areas' of the open economy during this period.

The country will also support Beijing's building of a comprehensive demonstration zone for the further opening-up of the service industry, and increase the number of comprehensive pilot projects to stimulate growth in this sector across the country, he said at a news conference during the ongoing third China International Import Expo in Shanghai.

〈The Standard, Nov 4, 2020〉Bargain hunters can expect bigger discounts on property in districts close to Hong Kong's airport, as foreign pilots and flight attendants leave the city amid mass lay-offs at Cathay Pacific Airways.

Market observers said areas such as Tung Chung, Tsing Yi and Discovery Bay that were popular with airline employees could bear the brunt of the downturn. With the carrier unlikely to resume full operations until the coronavirus pandemic was brought under control, prices and rents in the area would come under further pressure, they added.

Anxious sellers had cut prices of flats in Tung Chung, the district closest to the airport, by 3 per cent to 5 per cent in the wake of the lay-offs, agents said. They expect prices to decline by up to 10 per cent in the next six months.

A foreign employee of Cathay Pacific, due to retire early next year, had to increase the discount on a flat to 8 per cent to clinch a sale, according to Andy Chan, district sales manager at Centaline. The 518 sq ft flat at Le Bleu Deux in Tung Chung sold for HK$7.33 million, HK$650,000 lower than the asking price.

Last month, the city's top airline axed 5,900 jobs and closed its regional unit Cathay Dragon in a bid to stay afloat. The pilots and flight attendants who survived the lay-offs have had to accept permanent wage cuts of up to 40 per cent. Compounding the issue is the city's rising unemployment rate, which was pushed up to a near-16-year high in the June to September period.

〈China Daily, Nov 3, 2020〉Indebted developers look to 'butler' services for growth as income slows
Traditionally, Chinese developers have offered little more than security and maintenance services to residents of their projects once the cranes and diggers have moved on.

But after 2014, when authorities removed price controls on property management fees, more home builders began offering extras like takeaway food and grocery deliveries, gardening and laundry services.

Seeing the income from these sideline businesses growing, the likes of Country Garden Holdings and Poly Developments and Holdings began to spin off their property services units and get them listed on the stock market.

Now, with Covid-19 keeping more people indoors, indebted developers are increasingly relying on these so-called butler services to help them through tough times. Some are even offering babysitting and beauty treatments.

"We are hiring university graduates for our butler jobs and they will take training and exams to qualify as chief butler, master butler, specialist, and so on," said Ye Mingjie, president of Shimao Services Holdings, an arm of Shimao Group Holdings, one of China's biggest home sellers.