Policy address boosts property stocks for the second day

Business | Stella Zhai and Bloomberg 18 Oct 2019

The total market value of the top five local developers - CK Asset (1113), Henderson Land Development (0012), New World Development (0017), Sun Hung Kai Properties (0016) and Sino Land (0083) - has surged by HK$37.5 billion in less than two days after the government unveiled its new mortgage policy.

The Hang Sang Index climbed 184 points to end at a one-month high of 26,848 points yesterday. New World Development once rose 5 percent before closing at HK$11.18. Henderson Land Development also rose 1.3 percent to HK$38.75, with CK Asset up 0.28 percent to HK$53.80.

Together, CK Asset, Henderson Land Development, New World Development and Sun Hung Kai Properties hold about 20 percent of total farmland in Hong Kong as of December 2018, data from Bank of America Merrill Lynch showed.

The stocks were spurred by the government's proposal to acquire 700 hectares of land for public housing, which is expected to enhance the value of farmland held by the companies.

Meanwhile, the combined wealth of six of Hong Kong's biggest property billionaires has jumped 3.3 percent since the policy address as shares of developers rallied.

That gives the six, led by CK Asset's Li Ka-shing and Henderson Land Development's Lee Shau-kee, a total net worth of US$98.7 billion (HK$769 billion).

CK Asset's Seaside Sonata in Sham Shui Po opened for sale yesterday, offering the first batch of apartments after the government raised the mortgage cap for first-time buyers.

Executive director Justin Chiu Kwok-hung expects the favorable measures will help reduce down payments for new homes and increase sales, but have a limited effect on property prices.

A total of 120 apartments, or 55 percent of the batch, were sold as of yesterday evening.

Elsewhere, Sun Hung Kai Properties' Cullinan West III in Sham Shui Po sold 100 of 235 units in its third sales batch yesterday.

Mainland developer China Evergrande (3333) also launched the first sales batch of its Emerald Bay on Tuen Mun on the news, offering 151 flats at an average price of HK$15,419 per sq ft after discount, the highest among first batches in the So Kwun Wat constituency.

Secondary transactions sped up on the policy. A 519-square-foot flat of Grand Yoho in Yuen Long changed hands for HK$8 million, or HK$15,414 per sq ft, 4 percent higher than the purchase price in 2016.

And the seller of a 392-sq-ft flat in Flora Plaza in Fanling refunded the deposit to the buyer and repriced the unit at HK$5.05 million, 4.5 percent higher than the previous asking price.

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