Sun Hung Kai Properties in pole position to benefit from Hong Kong’s property easing measures, analysts say
Sun Hung Kai Properties (SHKP), Hong Kong’s largest developer by market capitalisation, is being tipped by analysts to emerge as the “prime beneficiary” of the city’s removal of all property cooling measures.
With seven projects comprising more than 8,100 units expected to launch this year, SHKP is likely to benefit from a revitalised property market.
“SHKP has the most saleable resources among its peers of more than 6,000 units,” said Raymond Cheng, managing director and head of China and Hong Kong property at CGS-CIMB Securities. “We believe its HK$23 billion [US$2.9 billion] sales target for financial year 2024 is conservative, and think it can reach HK$30 billion, or even higher, due to the removal of [Hong Kong’s] harsh measures, and several rate cuts in the US during the rest of the year.”
During his budget speech last week, Financial Secretary Paul Chan Mo-po announced an immediate end to Hong Kong’s decade-old property curbs, including the Buyer’s Stamp Duty designed to target non-permanent residents, the New Residential Stamp Duty for second-time purchasers, as well as the Special Stamp Duty aimed at homeowners that resell their properties within two years.
On the same day, the Hong Kong Mortgage Authority followed suit and relaxed its curbs. Homes valued at less than HK$30 million will now be eligible for 70 per cent mortgage financing, compared with the previous rule that granted only 60 per cent financing for flats valued between HK$15 million and HK$30 million.
First-hand property sales are likely to rise by 42 per cent from 10,500 units in 2023 to 15,000 this year, according to Midland Realty, a forecast that should brighten the outlook for Hong Kong’s property developers.
SHKP is controlled by the Kwok family – one of Hong Kong’s wealthiest according to Forbes magazine – and is widely regarded as a “proxy to the Hong Kong property sector”, according to DBS Group Research.
“With strong execution capability on the one hand, and quality assets on the other, SHKP should be among the prime beneficiaries of the policy easing,” DBS said in its latest report. It also recommended buying SHKP stock, saying that it is trading at almost a 70 per cent discount and that its “prevailing low valuation is unjustifiable”.
On Monday, SHKP’s shares closed 1.86 per cent lower at HK$79.30 apiece.
Robert Ng Chee Siong, the chairman of Hong Kong developer Sino Land, and Adrian Cheng Chi-kong, the CEO of New World Development, have both expressed optimism about the Hong Kong property market following the lifting of the curbs.
While Adrian Cheng said “the progress is good” and hopes that trading volumes rise by as much as 50 per cent, Ng said the relaxations will help homebuyers as they “no longer need to pay the stamp duties”.
“Overall, we expect home prices to register flat to single-digit increases for 2024 while overall transaction volumes, both primary and secondary, are to increase by about 25 per cent to 50,000 units,” Adrian Cheng said.
Henderson Land’s Belgravia Place residential project sells out in 4 hours
Henderson Land’s Belgravia Place residential project sells out in 4 hours
Other developers that are likely to see a bonanza from the easing of property measures are Henderson Land Development and CK Asset Holdings.
Either individually or in joint ventures, other major home builders such as Henderson Land, Sino Land, CK Asset, Wheelock Properties, Wharf Properties, New World and K Wah International Holdings have anywhere between 88 units and 7,720 units ready for sale this year, according to JLL.
“Both primary and secondary transactions should increase in the coming months,” said Buggle Lau Kai-fai, Midland’s chief strategist. “For primary projects, we only had about 10,500 transactions in 2023. This year, we expect primary transactions to reach the 15,000 level and that is stepping back to a more normal level.”
SHKP tops Hong Kong’s home sales in 2023 as deals hit a 33-year low
SHKP tops Hong Kong’s home sales in 2023 as deals hit a 33-year low
Lau said any increase in home prices is dependent on demand in the coming months and if sales of new launches are sustained. “We believe that if we see a continued increase in sales volumes, then prices are likely to increase,” he said.
