As Hong Kong’s government scrambles for measures to rein in rising property prices, Asia’s richest man has turned to selling hotel rooms in the city, a move that may spark further regulation.
Li Ka-shing’s Cheung Kong Holdings Ltd. this week raised HK$1.4 billion ($181 million) selling all 360 rooms at its Apex Horizon project in Hong Kong’s northwest. Foreign buyers are required to pay a 15 percent extra tax on purchases of residential properties, one of the measures imposed in October to stem a doubling in housing prices in the past four years. The measures so far haven’t been extended to other real estate, such as hotel rooms, offices, shops and parking spaces.
The move challenges efforts by Hong Kong Chief Executive Leung Chun-ying, whose attempts since taking over in July to rein in home prices amid a widening wealth gap in the city have been stymied by low interest rates and a stream of buyers from mainland China. The government said it will inspect the development where Cheung Kong is selling the hotel rooms to ensure they aren’t being used as residences.
Cheung Kong’s sale “is a smart move, but it’ll probably be a one-time move,” said Lee Wee Liat, a Hong Kong-based analyst at BNP Paribas SA. “We’re a bit concerned this will trigger a government push to extend curbs to other property asset class. I doubt they’ll let this happen again.”
The city’s second-largest builder sold all the rooms, ranging from 656 square feet to 909 square feet in size, on Feb. 20 and 21, spokeswoman Anita Tsui said by phone yesterday.
Other curbs introduced by the government since 2009 include higher mortgage down-payment requirements and extra taxes when buyers resell homes within two years of purchases.
Leung, the city’s chief executive, has told government officials to “follow up closely” on the case, looking at issues of land-lease, planning, hotel management, fire and consumer-protection, Hong Kong’s Standard newspaper reported today, citing Leung’s remarks at a reception yesterday.
Officials will request information from Cheung Kong to clarify any legal restrictions, regulations and possible hotel-management issues, Leung said, according to the newspaper.
Hong Kong’s Development Secretary Paul Chan said Feb. 20 the government has sent inspectors to the Apex Horizon project to make sure the rooms aren’t used as residential apartments and are operating under guesthouse licensing rules.
Buyers should be aware of the uses of the units, Chan said, according to a transcript published on the government website. The government reserves the right to take back the property if the terms of the land grant are violated, he said.
Shares of Cheung Kong fell 2.4 percent to HK$119.30 at the close of trading in Hong Kong yesterday, the biggest decline since Feb. 5.
Li is Asia’s richest man with a net worth of $28.9 billion, according to the Bloomberg Billionaire Index.