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Saturday, April 25, 2015, 11:33

Record 78,000 units over next four years

By ANGES LU in Hong Kong
Record 78,000 units over next four years
As the government plans to put more land on sale for private residential development, homes builders will continue to release projects on a rolling basis in order to cash in on new investments — which may quench the city’s thirst for private apartments. (ASIA NEWS PHOTO)

Hong Kong has moved to further stabilize its runaway property market, long plagued by soaring homes prices, saying a record 78,000 new apartments will come on stream in the next three or four years — about 4,000 more that earlier forecast.

The disclosure comes as latest official figures show that the number of actual completion of private residential units has  fallen drastically.

At the same time, rents in the private residential market have also dropped for the first time in nearly a year, with rental yields hitting a record 25-year low.

The Transport and Housing Bureau said on Friday only 17 private residential projects offering a total of 900 units were completed in the first three months of this year — a plunge of 74 percent from the previous quarter and 69 percent down year-on-year.

Nine private residential projects broke the ground during the same period, providing a total of 2,000 units and representing a 75-percent decrease over the corresponding period last year.

A government spokesperson explained that the increase in the homes-supply forecast was due to two more disposed sites where construction may start any time.

"Among the 78,000 private residential units to be completed in the next three or four years, about two-thirds will be below 700 square feet in area," the spokesperson said.

The decline in actual completion was due to more small-scale private residential projects being completed in the past three months, while mostly small- to medium-sized projects broke the ground during the same period, lowering the number of apartments under actual construction.

"As the government continues to put land on sale for private residential development, and as many major private residential projects are due this year, we estimate that actual completion and construction will increase in future,” the spokesperson said.

Real estate analysts, however, warned that the overall trend of the property market cannot be assessed based on single-quarter figures, saying the Spring Festival, which fell on February 19 this year, had affected overall performance.

"As potential housing supply has reached a new high, developers will continue to release projects on a rolling basis in order to cash in on new investments," said Jeffery Ng Chong-yip, senior executive director of Hong Kong Property Services (Agency) Ltd. "And, they will continue to tempt the market with competitive prices."

"We estimate there will be some 18,000 to 20,000 private residential units under construction in 2015, realizing the government’s homes supply target," said Wong Leung-sing, senior associate director of research at Centaline Property Agency Ltd. "Registered primary unit sales can reach the same number this year."

On the rental front, rents in the private homes market fell for the first time in almost a year, while prices kept soaring.

Data compiled by the Midland Realty, covering 100 major private secondary housing estates in the city, show that rents in the private market dropped by  0.4 percent on a monthly basis to HK$25.5 per square foot in terms of construction area, after having risen for 10 months since last May.

At the same time, homes prices kept breaking records and rose by 0.5 percent last month, while rental yields — the rate of return from investment, calculated based on property costs and rents — dropped to 3.67 percent, a record low since 1990.

"The yields might continue to decrease as supply will go up," said Buggle Lau Ka-fai, chief analyst at Midland Realty. "There were 15,720 units completed last year, including some having been delivered to landlords. Many landlords will lease them out soon."

agnes@chinadailyhk.com

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