- Li Ka-shing says China property prices are 'reasonable'
- CK Property says not easy to acquire land at reasonable costs
Billionaire Li Ka-shing’s Cheung Kong Property Holdings Ltd. said the real estate market in Hong Kong remained challenging as sales in the city plunged to the lowest in 25 years last month.
“The property market conditions remained challenging in Hong Kong and on the
Mainland during last year,” the firm said in a statement on Thursday announcing an underlying profit of HK$15.6 billion ($2 billion) for its first full year as a publicly traded entity. “All development and marketing plans have proceeded cautiously according to their scheduled timetable.”
CK Property’s first full-year earnings after Li spun off real estate assets from his conglomerate in June come as the property market in Hong Kong is slowing, with prices dropping 11 percent since they peaked in September and sales plunging to a 25-year low in February. On the mainland, where the developer is also active, prices fell for most of last year amid uncertainty over the economy and a glut of homes.
Shares of CK Property fell 3 percent to HK$46.50 at 10:14 a.m. in Hong Kong, the worst-performing stock in the Hang Seng Property Index. The shares have declined 7.6 percent this year.
Li said in a press briefing on Thursday that property prices in China are “reasonable,” even as prices in the biggest cities have surged this year amid government stimulus.
No Easy Task
CK Property said property prices in Hong Kong and China will continue to be affected by increases in construction costs as wells as development and marketing expenses. The market, especially in Hong Kong, is also seeing increasing competition in land auctions from new entrants, the company said.
“It is therefore not an easy task to acquire land at reasonable costs,” CK Property said.
CK Property reported profit attributable to shareholders of HK$17.1 billion on revenue of HK$58.8 billion, according to its statement Thursday.
The firm derived 60 percent of its full-year sales from China, recording sales of HK$29.4 billion. Home prices in China, especially in some of the smaller cities, slumped last year on a slowing economy. Prices started to recover in the second half of 2015 in major cities amid easing monetary policy and loosened property curbs.
Sales reached HK$15.9 billion in Hong Kong, about 32 percent of its total sales, according to the earnings statement.
CK Property indicated that it may seek to expand beyond the real estate business, without giving details.
The company is “is open to considering various opportunities to generate revenue from other different sources,” it said The firm didn’t provide any other details on its plans.
— With assistance by Emma Dong