CHINA / Taiwan, HK, Macao |
Slow HK property hurts Sun Hung Kai profit(China Daily HK Edition)Updated: 2007-03-08 08:50 Hong Kong developer Sun Hung Kai Properties reported a fall in half-year earnings yesterday because of a drop in apartment sales, but many analysts believe the property market is about to heat up. Prices in the city's notoriously volatile housing market are tipped by some analysts to rise as much as 30 percent in 2007 as rising salaries, tax cuts and cheap mortgages make home buying more attractive. That will encourage developers such as Sun Hung Kai Properties, which reported an underlying net profit of HK$5.3 billion ($678 million) for the six months to December down 12.8 percent on the same period of 2005. The result fell within a wide range of expectations, with four analysts predicting that Hong Kong's biggest developer by market capitalization would post an underlying net profit between HK$4.8 billion and HK$6.1 billion. After brisk sales in 2005, Hong Kong's housing market slowed last year as interest rates rose. But many analysts believe any interest rate cuts this year will unleash pent-up demand. Sun Hung Kai has sold HK$8 billion of apartments so far in this fiscal year, which ends on June 30, 2007, just over half of its full-year target of HK$15 billion. "The residential market in Hong Kong is expected to fare better this year," Sun Hung Kai chairman and chief executive Walter Kwok said in a statement. "Low mortgage interest rates, high affordability for buyers and renewed confidence will support demand for housing." Apartment prices on Hong Kong island have jumped 90 percent since an outbreak of the SARS respiratory disease ravaged the economy in 2003, according to a Hong Kong University index. But the index is still 36 percent below a 1997 peak. Meanwhile, average income, up 20 percent and mortgage rates, at 5 percent, are half what they were a decade ago. Sun Hung Kai notched up HK$6.89 billion worth of property sales in the second half of 2006, down 5.4 percent from a year earlier. The group's net rental income rose 13 percent to HK$2.54 billion. Reuters |
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