Sun Hung Kai Properties Ltd. paced gains by Hong Kong developers in local trading after Bocom International forecast an increase in home prices, fueling expectations that low interest rates will boost demand.
Sun Hung Kai, Hong Kong’s biggest developer by market value, rose as much as 5.5 percent to HK$120 and was trading at HK$117.70 as of 10:16 a.m. local time. Henderson Land Development Co., controlled by billionaire Lee Shau-kee, climbed 4 percent to HK$47.20 after gaining as much as 5.4 percent.
Hong Kong property prices will rise 10 percent this year, while transaction volumes will rebound in the next three months, Alfred Lau, a Hong Kong-based analyst at Bocom, said in a report today. It follows a similar call by Nomura Holdings Inc., which forecast a 10 percent gain in housing prices and 12.5 percent increase in retail rents this year.
“Expectations that the low rates environment will continue is helping sentiment improve,” said Eva Lee, a Hong Kong-based analyst at UBS AG, in an interview today. “Investors are also encouraged by signs that developers are trying to raise cash to replenish their land bank.”
The city’s developers, led by Sun Hung Kai and Wharf Holdings Ltd., are selling $6.18 billion of debt in 2012, the busiest quarter on record, according to data compiled by Bloomberg.
Hong Kong’s housing market may be staging a rebound with sales the past weekend increasing 43 percent. The city’s home prices have fallen 6 percent since June and the government last month recorded the second-lowest number of transactions since it began collecting data in 1996, because of rising borrowing costs, extra transaction taxes and higher down-payment requirements.
U.S. Federal Reserve officials said Jan. 25 benchmark interest rates would probably remain below 1 percent through 2014. Interest rates in Hong Kong normally follow those set by the U.S. as the city’s currency is pegged to the U.S. dollar.
The Hang Seng Property Index, which tracks seven of the biggest publicly traded developers in Hong Kong, climbed 2.6 percent, extending yesterday’s 3.3 percent advance.
Cheung Kong (Holdings) Ltd., the developer controlled by Li Ka-shing, Hong Kong’s richest man, rose 2.5 percent to HK$111.80. Sino Land Co. jumped 4.3 percent to HK$13.64.