Kerry Properties' Executive Director Chu Ip Pui
“Be a cautiously optimistic believer in property investments.”
A“Be a cautiously optimistic believer in property investments.”
ll of a sudden, we are entering the third quarter of 2019. Looking back at the first six months of the year, a lot of events that unfolded—both domestically and internationally—have brought a sense of insecurity and instability to the housing market but didn't have much effect on overall housing prices. For Chu Ip Pui, executive director of Kerry Properties, Hong Kong's housing market is likely to stay relatively stable and strong throughout the rest of year, thanks to the current supply shortage and low interest rates.
He also notes that the Us-china trade war won't inflict catastrophic damage on the city's housing market, revealing that Kerry Properties is planning to increase its Hong Kong land reserve in 2019 and 2020. “The Lantau Tomorrow Vision, the northeast New Territories development and brownfield site reclamation will all take a long time. The first batch of projects are unlikely to be completed until 2023, so they won't ease the housing supply problem in the short term,” he explains. “Plus, the public-private flat ratio has been adjusted to 70:30, and that means a dwindling supply of private housing in the future. The demand-supply imbalance remains severe, which boosts home prices.”
Continuing to Buy Hong Kong Land
Over the past few years, Kerry Properties has been ramping up its land reserve in several mainland Chinese cities while only investing in private acquisitions and MTR sites in Hong Kong. Chu stresses that the Group is sticking to its basic policy of always keeping enough Hong Kong land reserve for the next four years, and is particularly interested in revitalising industrial buildings. Without revealing the details of Kerry Properties' future land-buying strategy, he says that the government's land-sale plan for 2018 and 2019 doesn't involve a lot of residential sites, implying that his company hasn't been seeing many desirable lots available on the market, but adds that Kerry Properties will “do what it can” in terms of increasing its residential portfolio.
“Hong Kong's housing market still enjoys a lot of advantages—the high demand, for example. We saw over 8,000 sales of new and pre-owned homes in the first four months of 2019. Although trade tensions caused the market to cool down last year, private and official home price indexes quickly bounced back, showing that investors remain largely confident. The sales boom of the first quarter is also an indicator that home buyers have plenty of savings waiting to be put to use. So I believe that property is still the best form of investment,” Chu says.
As for the main market influencers at the moment, he thinks that apart from land supply and interest rates, one also has to consider other factors such as the overall capital market and buyers' sentiment. He adds that the government's cooling measures haven't been effective in curbing home prices as the public is still buying properties and displaying confidence in the market, so prices rebound every time shortterm negative market sentiment disperses.
Kerry Properties is currently selling a number of residential developments, including Mantin Heights in Ho Man Tin, The Bloomsway in Tuen Mun, and Mont Rouge in Kowloon, which commenced sales last month under a tender scheme. According to Chu, the first two projects have sold 64 and 33 units, respectively, in the first four months of 2019 for a combined HK$3.4 billion; meanwhile, Mont Rouge has sold three large units, one of which—a duplex home—was bought at over HK$300 million, or HK$101,800 per square foot, setting a new record for Kowloon.
The public is still buying properties and displaying confidence in the market, so prices rebound every time short-term negative market sentiment disperses.
Despite facing the ever-busy Lung Cheung Road, Mont Rouge's elevated position with Lion Rock at its back greatly lowers the effect of the traffic noise, Chu notes. In addition, the units are fitted with large glass windows, allowing for good air circulation and beautiful open views.
Wong Chuk Hang Project to Open Sales in 2020
Another major residential project for Kerry Properties is in the southwestern part of the Wong Chuk Hang Station Property Development. The Wong Chuk Hang Station Package Two Property Development Project, covering an area of 92,600 square feet, is expected to reach a per-squarefoot price of over HK$30,000 upon its completion.
Chu says that the Wong Chuk Hang development plans to have two residential buildings with an approximate total of 600 units, most of which will be two- and threebedroom flats boasting mountain and sea views, and the Group plans to open sales sometime around 2020. Traditionally an industrial area, Wong Chuk Hang has been gradually transforming into a commercial and residential neighbourhood, driving up its housing demand and giving the Group much confidence in its upcoming development. Meanwhile, its La Salle Road project in Kowloon Tong, like Resiglow in Happy Valley, will be designed and managed for lease. Slated for a 2021 opening, it will have a total floor area of 45,000 square feet.
Chu adds that all units of Resiglow have been rented out at an average price of HK$60 per square foot, while the penthouse unit with balcony was leased to a foreign company at close to HK$100 per square foot. The Group therefore chooses to profit from rent over selling some of its developments in urban areas.
As for Kerry Properties' many luxury projects, including Aigburth, Tavistock, Branksome Crest and Branksome Grande, Chu says that apart from a few units sold, 245 (or 98%) of the total available units are currently being rented out. He believes that as land prices continue to rise, these stately homes will become increasingly valuable, and is therefore very optimistic about the future prospects of luxury developments.