April 24 (Bloomberg) -- Hong Kong home prices may have fallen to their lowest point as China’s economy starts to rebound, says Ronnie Chan, chairman of Hang Lung Properties Ltd., the city’s fourth-biggest developer by market value.

Hong Kong, a trade and financial hub for China, has seen home values drop as much as 25 percent from the 2008 peak as the economy contracts the most in 10 years. Hang Lung has delayed offering apartments in two projects in the West Kowloon district.

“I don’t see another leg down” in prices, Chan said in an interview yesterday in Ho Chi Minh City, Vietnam, where he is attending a conference. “There are indications that the residential market in Hong Kong is doing O.K.; I don’t see it going down further.”

Easier bank lending, builders’ price cuts and rebounding equity markets stimulated home sales, leading to “encouraging signs” in April, real estate agency Colliers International said. The number of homes sold fell 26 percent in March from a year earlier, the smallest drop in eight months, according to Land Registry figures.

“Developers have adopted a pragmatic approach when setting asking prices,” Simon Lo, Hong Kong-based director of research and advisory at Colliers, said in a statement yesterday. “In addition, local banks are more relaxed in lending policy.”

Home prices gained 5.85 percent between the end of 2008 and April 5, narrowing their decline from the peak to 17 percent, according to figures from Centaline Property Agency Ltd., one of the city’s biggest real estate agencies.

Goldman Sachs Group Inc. last week cut its forecast for the 2009 drop in Hong Kong new-home prices to 5 percent from 15 percent, as the world’s biggest economies show signs of improvement on stimulus spending.

China’s Stimulus

In China, the world’s third-biggest economy, increased bank lending and the government’s 4 trillion yuan ($585 billion) stimulus spending plan helped urban fixed-asset investment rise by almost a third in March.

Still, in addition to depending on China, any rebound in Hong Kong’s housing market “does not necessarily mean that it will not go back down, like a W,” Hang Lung’s Chan said. “It can rise a little and then drop again. That is a possibility.”

Until home prices recover “strongly,” Hang Lung isn’t keen to offer for sale more units in the Harbourside and Long Beach developments in West Kowloon, Chan said. “We’ll wait for a better market,” he said.

In China, where Hang Lung has invested HK$20 billion ($2.58 billion), the company doesn’t plan to buy real estate from foreign investors selling assets as values drop, Chan said.

‘Miss Universe’

“They don’t have Miss Universe,” Chan said. “Those are speculators; I don’t say that they add zero value, but compared to what we do, they almost add no value. We only want Miss Universe.”

Hang Lung, which bought its first property in the mainland in 1992, should be able to conclude “multiple deals” in China this year, Chan said. The developer has already bought land in the cities of Shenyang, Tianjin, Jinan and Wuxi, he said.

New projects in China will have a value of at least $250 million and cover a minimum of two hectares, Chan said. Most will be shopping centers, possibly supplemented by serviced apartments and offices, he said.

Hang Lung has said it plans to spend about HK$40 billion on 18 Chinese projects in 2005-2009. The mainland contributed 40 percent of revenue in the fiscal first half, up from 8.6 percent the same period a year earlier on lower Hong Kong home sales. Hang Lung owns two commercial properties in Shanghai.

Hang Lung, owner of Standard Chartered Plc’s Hong Kong headquarters, has gained 19 percent this year in Hong Kong trading, beating Li Ka-shing’s Cheung Kong (Holdings) Ltd., the world’s second-biggest developer by value, which has risen 6.8 percent. The benchmark Hang Seng Index has gained 5.8 percent.

Ronnie Chan and his brother Gerald Chan are amongst Hong Kong’s 10 richest men, with a combined net worth of $1.7 billion, according to Forbes Magazine.

To contact the reporters on this story: Jason Folkmanis in Ho Chi Minh City at folkmanis@bloomberg.net; Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net.

Last Updated: April 24, 2009 00:38 EDT