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There has always been something unique about Hong Kong’s residential property market, which has been climbing for the past eight years.
When you ask Li Ka-shing – the city’s richest man –
about it, he will cite a popular quote: “Success hinges on your father’s deeds.” The phrase “father’s deeds” sounds similar to “hard work” in Cantonese.
Of course, the chairman of CK Asset, which was formerly known as Cheung Kong Property, is always worth listening to.
“Everybody said Hong Kong property was too expensive but people continue to buy it,” Li remarked. “[The] father or grandfather will buy flats for their offspring because they want to take care of them.”
But, the 89-year-old tycoon has issued a veiled warning about where the market is going.
When asked if residential property prices would continue to go up, he said: “I am not sure. At this moment, demand is still quite strong.”
One area of concern could be the “nano flat” sector, which has seen outbreaks of “panic buying”. Nano flats are studio units less than 200 square feet and many believe there is an oversupply problem in the market, as they are quick to build.
Overall, home sales appear to be doing well. Sun Hung Kai Properties priced a two-bedroom unit at St Barths in Ma On Shan – about an hour from Central – at a minimum HK$6.5 million (US$831,265).
This was nearly a 20% increase on last year’s figures.
At the nearby district of Tai Po, a 121-square-foot home unit – smaller than a regular parking space – in Tai Wo Estate sold for HK$1.93 million or close to HK$16,000 per square foot last year.
Smaller units = bigger profits
Smaller units mean bigger profits in Hong Kong because of the imbalance between home demand and supply. In recent years, developers have moved toward smaller units.
According to data from the Ratings and Valuation Department, slightly over 4,300 small flats were built by the end of last October, a rise of 10% from the same period in 2016. That was also double the figure from 2014.
Li’s Cheung Kong Property is not known for building small units. But the developer’s 170-square-feet flats at Mont Vert in Tai Po have doubled in value after coming on the market at HK$1.7 million in 2014.
But Li thought prospective property buyers still need to be wary. “Hong Kong property is some of the highest [in price] in the world,” he said. “If you buy for self use
you need to be able to afford it.”
Last year, Cheung Kong Property put up some great numbers after selling The Centre tower block for HK$40.2 billion, a record for a Grade-A office in Hong Kong.
The group also cashed in on various properties in China, including a HK$20-billion development in Shanghai.
(ASIA TIMES)
