Pavilia Farm III rakes in $2.7b amid buying frenzy
Hong Kong's residential property market remained robust over the weekend as homebuyers snapped up nearly all flats put on sale at The Pavilia Farm phase three in Tai Wai yesterday.
New World Development (0017) collected about HK$2.7 billion after selling 169 out of 173 flats on offer at the third phase of The Pavilia Farm above Tai Wai Station, with one buyer forking out HK$54 million for three flats.
NWD had received about 30,500 registrations of intent from potential buyers for the 173 flats, making them 175 times oversubscribed, and the highest number of registrations since 1997.
The 173 flats include 170 flats in the fourth price list and three flats that were given up by previous buyers.
The 170 flats in the fourth price list were offered at an average price of HK$24,858 per sq ft after a maximum 20 percent discount is applied, 24 percent higher than the first price list.
NWD had recorded three cases of forfeited deposits totaling around HK$1.38 million over three flats at the third phase. The three flats were offered at between HK$7.91 million and HK$11.84 million. The preliminary deposits are equivalent to 5 percent of the purchase prices.
In the secondary market, an property agency reported 16 secondary deals at 10 blue-chip housing estates over the past weekend, down by 20 percent week-on-week.
Among the deals, a 717-sq-ft flat at Mei Foo Sun Chuen in Lai Chi Kok changed hands for HK$10.53 million, or HK$14,686 per sq ft.
The seller will gain HK$4.98 million after holding the property for 11 years.
Meanwhile, the full opening of the Tuen Ma Line on June 27 is propping up transactions in Kowloon City District.
A 478-sq-ft flat at 18 Farm Road in To Kwa Wan fetched HK$9.8 million, or HK$20,502 per sq ft, about 10 percent higher than the bank valuation. The seller bought the flat for HK$4.25 million in 2010 and will gain HK$5.55 million. The seller decided to sell the flat as the Tuen Ma Line is to launch in full at the end of June, according to the property agency.
Hong Kong property stocks enjoy value revival as they hitch ride on economic rebound with foreign funds on the prowl
The Hang Seng property index has returned 12.8 per cent this year, outperforming the local market’s blue-chip benchmark
Analysts are bullish on the prospects of developers with shopping malls in their portfolio as latest e-voucher scheme seen propelling retail sales
Hong Kong property stocks are enjoying a value revival as investors pay the highest price for their underlying assets in more than a decade. Strong response to new residential projects, more spending vouchers, and a return of foreign funds could fuel that momentum.
The price-to-book ratio of Hang Seng Property Index members has risen to 1.8 times this year, according to data compiled by Bloomberg, a level not seen since they averaged two times in 2009. In pandemic-stricken 2020, they slumped to a four-year low of 0.7 times.
Analysts at DBS Bank and Goldman Sachs are upbeat about the market outlook, saying efforts to revive consumption will translate into higher stock prices. The Blackstone Group’s HK$23.7 billion (US$3.05 billion) bid for Soho China also signalled cash-laden funds are on the prowl for bargains.
“The property market remains strong with large amounts of liquidity chasing assets like real estate,” said Raymond Cheng, head of Hong Kong and China research at CGS-CIMB Securities. “There is still room for Hong Kong property stocks [to appreciate], particularly for developers with a large presence in the residential sector.”
Hong Kong’s economy is on the mend, recovering from several quarters of recession brought on by the social unrest and the pandemic. The city’s economy expanded by 7.9 per cent in the first quarter, the most in 11 years, while new home sales are rising at the fastest pace in two years.
Measures to support domestic consumption, such as the latest round of e-voucher scheme, has brightened the outlook for retail sales, which rebounded 12.1 per cent year on year in April. This bodes well for share prices of developers with shopping malls in their portfolio, DBS said.
“The upside has not been completely priced in,” said Jeff Yau Cheuk-man, property sector analyst at DBS Bank (Hong Kong). The situation in Hong Kong continues to improve and investors are showing a renewed interest in this sector, he added.
The Hang Seng Property Index has returned 12.8 per cent this year, outperforming the broader Hang Seng Index, which has gained 7.4 per cent. If annualised, the gauge could record its best year since 2017, according to Bloomberg data. In the US, the real-estate services subsector of the S&P 500 Index has risen 37.7 per cent this year, compared to a 11.7 per cent increase in the main gauge.
Hong Kong’s e-voucher scheme, designed to boost local spending and accelerate the recovery, will offer every adult Hong Kong resident HK$5,000 in spending vouchers, benefiting 7.2 million people. The registration for the scheme is set to begin in July.
Hysan Development, the biggest landlord in Causeway Bay and operator of the Hysan Place and Lee Theatre shopping centres, would particularly benefit from the consumption boost, Yau said. Retail properties made up 30 per cent of its 4.5 million sq ft of portfolio at end-2020.
The stock has risen 5.3 per cent this year to HK$29.95. DBS Bank has a buy rating with a target price of HK$35.80, representing a 19.5 per cent upside. Yau said that the worst is probably over for the retail sector, which means leasing incomes are due for a rebound.
Sun Hung Kai Properties has risen 19.7 per cent this year to HK$119.70. The developer has 12 million sq ft of retail space across Hong Kong, including IFC Mall in Central and New Town Plaza in Sha Tin. Goldman has a buy rating and a target price of HK$151.
The strong performance of Hong Kong developers this year has been driven by a notable pickup in property sales and prices, and low interest rates, Goldman analysts led by Gurpreet Singh Sahi wrote in a report earlier this month.
“We expect this outperformance to continue as they are in the early stages of a positive inflection, with improving earnings driven by rising transactions in the Hong Kong residential market, improving property price outlook, and retail sales recovering,” the US bank said.
New residential project launches by the city’s biggest developers this year have received strong response from investors. New World Development has been a stand-out, selling all batches at
The Pavilia Farm project atop the Tai Wai MTR station.
New World Development, which also operates the K11 Mall in Tsim Sha Tsui, has soared 11.5 per cent this year to HK$40.25. Goldman Sachs and CGS-CIMB Securities are bullish on the stock, giving the stock a 31 to 39 per cent upside based on their price targets.
(South China Morning Post)
MTR Corp says Central harbourfront site bid did not involve government board members to avoid conflict of interest
MTR joined Wharf REIC and Chinachem Group consortium to bid for the prime Central harbourfront site
Board members with conflict of interest were excused from the part of the meeting at which the project was discussed and the decision to submit a bid was taken
Government board members were absent from meetings related to the discussion and decision to bid for a prime site in Central, the MTR Corp said to allay public concerns about conflict of interest.
The rail operator and property developer, in which the Hong Kong government holds a 75 per cent stake, issued a statement in response to media queries over potential conflict of interest after it said it had taken part in the government land tender for the New Central Harbourfront Commercial Site 3. The decision to bid was based on purely commercial consideration, it added.
It was the first time since the MTR’s formation in 1975 that the company had taken part in a government land bid. It formed a consortium with Wharf Real Estate Investment Company, a unit of the Woo family’s Wheelock and Company, and Chinachem Group, to submit a bid for the plot.
“When the decision to submit a bid for the project was deliberated by the MTR’s board of directors, those board members who had an actual or potential conflict of interest in the project (including all government board members) did not receive the relevant board papers and were excused from the part of the meeting at which the project was discussed and the decision to submit a bid was taken,” the MTR said on Saturday.
The site, which can yield 1.61 million sq ft of gross floor area, has been valued at between HK$37 billion and HK$55 billion (US$7.1 billion). It is likely to set a record as the most expensive in the city’s history, according to property consultants.
MTR said that as this was a landmark project located in Central, next to Two International Finance Centre (IFC2) which was developed and managed by the company, “it will bring synergies to the company’s existing business and further reflect the MTR’s community development experience in Hong Kong.”
MTR, which owns the land, jointly developed the IFC2 as part of a consortium led by Sun Hung Kai Properties and Henderson Land Development.
MTR said that its bid partners Wharf REIC and Chinachem Group have their own strengths and bring synergies to the project’s development and management.
MTR’s board members include Secretary for Financial Services and the Treasury Christopher Hui Ching-yu, Secretary for Transport and Housing Frank Chan Fan, Commissioner for Transport Rosanna Law Shuk-pui and Permanent Secretary for Development (Works) Lam Sai-hung.
Under the government’s “two envelope” approach for the sale of the Central harbourfront site, submitted bids will be weighed equally for design and price.
The 516,316 sq ft plot that includes the General Post Office has attracted six bids from some of Hong Kong developers owned by the city’s wealthiest families.
Other bidders include Sun Hung Kai Properties, Hong Kong’s largest developer by market value and controlled by Kwok families. CK Asset (Holdings), one of the two flagship companies owned by Hong Kong’s richest tycoon Li Ka-shing. Henderson Land, founded by the second-richest tycoon Lee Shau-kee is also taking part. Sino Land, controlled by the family of Robert Ng Chee Siong, submitted a joint bid with Great Eagle Holdings of the Lo family, as well as the Chinese state-owned enterprise China Merchants Group.
(South China Morning Post)
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