Main reference: Story by Sinafinance blogger Beryl Guan
DESPITE THE steadily rising Hong Kong shares market, equities are still a better bet than property investment in the SAR.
The Hong Kong Special Administration Government just announced it would work to boost the supply of residential units.
While this is great news for home and apartment shoppers, it’s not exactly cause for celebration among developers and those looking to invest in real estate,.
The supply-friendly policy should turn people off from putting their investment capital into the sector as supply will get a boost over demand in the near term when new units begin mushrooming up across the SAR.
SAR Chief Leung Chun-ying, who recently took office, made the city’s high-flying property sector with flat and home prices out of the reach of many in the middle class his first order of business.
He said that non-market measures like increased housing subsidies and artificially enhanced supply campaigns would be enacted to help quell criticism from those who find it difficult to afford reasonable housing facilities.
The SAR Chief said additional plots would be rezoned for residential use and new plots opened for property development, with around 67,000 private-use units likely to be available in the real estate sector before 2016.
He added that the SAR government aimed to oversee the building of around 100,000 government-subsidized public housing units toward the end of the decade.
Whether you think it might happen overnight or in 2015, the fact of the matter is that the property sector is on the brink.
Because of the uncertainty in the residential and commercial real estate market, especially with new administrative moves to boost supply, investors are better off putting their investment capital into non-property A-shares or Hong Kong-shares.
Equities without heavy exposure to Hong Kong’s property development sector or corporate/government bonds look more attractive than real estate right now.
The name of the game right now should be leverage, as Hong Kong’s property plays are too big to completely ignore but should be handled carefully amid these new supply-opening measures.
The usually apolitical and socially harmonious SAR has been rocked recently by mass protests and many see Leung’s conciliatory measures, sure to irk developers, as a way to help salvage his political fortunes.
"Land shortage has seriously stifled our social and economic development and smothered many opportunities for people to start and expand their businesses," Leung recently told the media.
And it wasn’t just existing land that was being eyed, as the government was also planning to reclaim up to 3,000 hectares from the ocean in and around Hong Kong’s iconic Victoria Harbor.
Recently, Hong Kong instituted a 15% levy on “foreign” property investment, which is mainly targeted at the flood of PRC-based capital flooding into the SAR’s real estate sector.
However, the move has done little to stem the amount of speculative cash flowing in and the government continues to struggle with disgruntled residents clamoring for more affordable housing – while also trying to balance the commercial needs of developers.
See also:
CHINA's REAL ESTATE & RETAIL: Latest Happenings...
Sumer: "Many Of My Property Stocks Have Performed Smartly In 2012"
