Rumor flies in uncertain times

In a rather unexpected development, a Sun Hung Kai Properties development project in Tuen Mun's So Kwun Wat has been the subject of speculation that it would go unfinished - even though SHKP is the biggest local property developer.

The absurdity of the speculation is comparable to asserting that one of the largest banks here had been subject to a bank run.

It is unlikely that anyone would believe it. Nonetheless, a timely clarification was needed and SHKP has just dispelled rumors that have gone viral on the internet since a snapshot of a circular purportedly issued by the firm to the site office to advise on work stoppage was posted.

When the market is weak and people's confidence is low, the public is more susceptible to be influenced by speculation.

As developers take turns to slash prices by big discounts to clear inventories, public confidence is eroded further.

Had the property market been on the rise, there would be no market for rumors. So even if it were not SHKP this time, it would have been another developer if something less than normal was noticed by someone, somewhere.

The speculation began with an SHKP notice reportedly issued to the site office of the So Kwun Wat project, which was said to have advised site supervisors to stop all internal building works, with construction of the buildings continuing until they reached the top.

Then, apparently, building works at the site would stop.

So it was speculated that SHKP would leave the site unfinished which, to say the least, is rather negative.

SHKP's clarification was categorical, denying the project would be left unfinished.

Rather, it will alter the building plans to take into account changes in the market and submit the alterations to the authorities at the appropriate time for approval.

Thus, according to SHKP, the project will be finished over a course of time.

According to the lease agreement, the developer has until 2028 to develop the site.

There is no doubt SHKP will finish the project. That being said, it is probable that the company is slowing down the development to review the building plans on one hand and to buy time to monitor the market situation on the other.

Some variables lie ahead in the market.

First, will the Federal Reserve start lowering interest rates in the second half as anticipated?

Second, will the government change the current 70-30 public-private flat ratio to reduce public housing production after Development Secretary Bernadette Linn Hon-ho indicated there would be room to review the ratio?

SHKP was stating the obvious that the market has changed.

The property sector is saturated with inventory and developers are forced to slash prices almost every time a sale is launched, which then creates a problem for earlier buyers by making it difficult for them to secure sufficient mortgages.

The So Kwun Wat site offers more than 1,300 units and, although that is not a huge number for SHKP, it is not small either.

The changes do not bode well for local construction workers. Though SHKP said no staff members would be laid off due to the decision, those working for sub-contractors would have to look for jobs at other construction sites.