New World Development sees stable HK home price amid epidemic

Hysan Development

28/02/2020 11:53

HONG KONG, Feb 28 (Reuters) - Property developer New World
Development  0017.HK  expects house prices in Hong Kong, among
the most expensive in the world, will be stable despite the
epidemic outbreak, given the strong demand.
    The company's executive vice-chairman Adrian Cheng told an
earnings conference that the financial city's economy is being
hit harder by the coronavirus than SARS, but he added that he is
confident the the market will recover just as it did in 2003.
    Cheng's comment echoed those of commercial property
developer Hysan Development  0014.HK  last week, which said it
is "facing one the biggest crisis periods in recent history" in
terms of the impact on its business.
    "I'm cautiously optimistic. Even during the epidemic,
there's sill a very strong demand, looking for a time and
opportunity to go into the market," New World's Cheng said.
    Hong Kong private home prices in January were 4.7% lower
than the peak in May 2019, as the emergence of the coronavirus
further clouded a property market already hit hard by
anti-government protests last year.  urn:newsml:reuters.com:*:nL3N2AS0XV
    Apart from home sales, developers' rental income from
retail, hotels and offices have also been pressured by
U.S.-China trade tensions.
    Now, retailers are launching themselves into a rare battle
with developers for deeper and longer-term rental cuts.
 urn:newsml:reuters.com:*:nL3N2AO29N
    In the first half ended in December, New World Development
recorded a 27% drop in underlying profit to HK$3.9 billion
($500.53 million), mainly due to a lack of new property
development project completions in Hong Kong.
    Its department stores and hotel businesses fell due to the
protests' impact on tourism. Cheng expected the company's hotel
occupancy rate to decline further this year.
    Including the investment properties' fair value impact,
overall group net profit plunged 90% during the period, as
valuers were concerned over the rental outlook in the city. 
    On Thursday, bigger rival Sun Hung Kai Properties  0016.HK 
said it expected revenue from its retail and hotel portfolios
will see further reductions in the short term.
    "Should the latest epidemic linger for a longer while, its
adverse impact on the group’s property sales and earnings will
be felt in the next two years," the developer said in an
earnings statement.
    Its first-half underlying profit ended in December was down
2.3% to HK$13,422 million.    
    
($1 = 7.7917 Hong Kong dollars)

 (Reporting by Clare Jim; Editing by Louise Heavens)
 ((clare.jim@thomsonreuters.com; +852 2912 6653; Reuters
Messaging: clare.jim.thomsonreuters.com@reuters.net))