Testing Hong Kong’s stressed property market

WHAT’S the true value of an apartment or office space in Hong Kong?

No one really knows. Property sales, especially in the pre-owned segment, have slowed to a trickle.

Li Ka-shing, nicknamed “Superman” for his rags-to-riches story, is the last one who has to worry about a possible property crash among the city’s tycoons.

The 95-year-old’s flagship CK Asset Holdings Ltd is cash-rich and runs a diversified business.

The company owns real estate in Singapore and the United Kingdom, as well as infrastructure and utility assets in Australia and Germany.

But Li’s family seems determined to stress test Hong Kong’s property market.

Its unconventional moves are causing unease among other developers and homeowners.

Buying frenzy

Last week, CK Asset stirred up a local buying frenzy when it put up for sale flats at a development in the north Kowloon district.

More than 600 units were priced at HK$14,686 (US$1,880) per sq ft on average, a seven-year low for new apartments in the city. Tens of thousands of buyers wrote deposit cheques, hoping to snatch the deal.

It was the first taste of a price war before the city gets flooded with supply.

The number of unsold new apartments – completed or under construction – has hit a decade high.

Over 35,000 units from 82 projects could be coming to market in the second half, according to Bloomberg Intelligence.

For comparison, the last time the city recorded at least 30,000 new apartment sales was 1998.

Going forward, rival developers are expected to price units at 10% below so-called market levels.

A mirage

Hong Kong property transaction volume, especially in the secondary market, dwindled after steep stamp duty was introduced in late 2012.

CK Asset will pounce when it spots rivals in distress. It was in talks with banks, including HSBC

The original article can be found here