Sun Hung Kai Properties Ltd., Hong Kong’s largest developer, raised its 2012 fiscal year home sales target 14 percent as the city’s property market will withstand a global economic slowdown.
The company aims to sell HK$32 billion ($4.1 billion) worth of homes through the sale of 3,700 properties, revising an earlier target of HK$28 billion from 3,000 units, Eric Chow, an executive director at the developer’s agency arm, told reporters at a briefing today. The company has sold HK$23 billion of homes since July 1, he said.
Hong Kong’s government will ease some of its property-cooling measures if home prices extend their decline amid Europe’s worsening credit crisis and a global economic slowdown, the city’s financial secretary John Tsang said this week. Property prices in the city dropped to a six-month-low in November as used-home transactions slumped as the threat of a recession dents buyer confidence.
“The impact of global economic uncertainties on Hong Kong and Asia is much milder” than on the rest of the world, Thomas Kwok, who takes over as Sun Hung Kai’s co-chairman today, said at the briefing. Sun Hung Kai still sees “support in the property market,” he said.
About HK$5.2 billion of the sales for the year will come from projects in China, with HK$26.8 billion in Hong Kong, Chow said. Sun Hung Kai sold HK$37 billion of homes in the previous fiscal year ended June 30, the company said in September.
Sun Hung Kai’s shares rose 0.7 percent to HK$99.70 at the close in Hong Kong, reversing a 1 percent loss. The stock has declined 23 percent this year, matching the drop in the Hang Seng Property Index, of which it’s a member. Hong Kong’s benchmark Hang Seng Index has declined 17 percent this year.
Hong Kong’s government imposed additional taxes last year and tightened access to mortgages four times since 2009 after prices jumped 70 percent, underpinned by record-low interest rates and an influx of wealthy Chinese buyers.
Tsang said this week the timing of any loosening of the property measures was uncertain. “Timing is a judgment call that I will have to make nearer the time,” he said.
No Price Cut
Sun Hung Kai has sold 90 percent of the 1,028 units at The Wings project in the Tseung Kwan O area since sales began in late October, Victor Lui, an executive director at its agency arm, said today. The company hasn’t cut prices at the development to boost sales, Lui said today.
Sun Hung Kai and its rivals are accelerating home sales to raise cash and may issue new shares to help finance projects as credit costs rise amid tightening liquidity at the city’s lenders, according to Barclays Capital Research.
Hong Kong developers may need to refinance as much as $6.1 billion of syndicated loans in 2012 and a further $4.9 billion in 2013, Barclays said. Average pricing of syndicated loans to the city’s biggest companies has risen to about 150 basis points in October from below 50 basis points in 2007, it said.
Sun Hung Kai has “ample” cash flow and doesn’t have a need to raise funds, Chief Financial Officer Patrick Chan said.
The Hong Kong Monetary Authority, the city’s de-facto central bank, has asked lenders to keep more reserves as part of their counter-cyclical measures, Chief Executive Norman Chan told reporters in Beijing last month, adding that loan growth may slow next year on lower mortgage lending.