Star Spreads unit price increase this year

DBS Vickers Hong Kong real estate analyst Qiu Zhuowen said that the burden of property prices in Hong Kong is getting heavier and heavier, coupled with changes in government policies to increase supply and help people get on the bus, expected this year Property prices in Hong Kong have slowed to single-digit increases and are unlikely to repeat the 14% increase recorded last year. He is optimistic about medium-sized flats, as the “floor-changing” period, which will benefit from the stamp duty exemption, is extended from 6 months to 12 months, while the fine-priced flats “remain stable and well”.

Qiu Zhuowen means unless there is a Black Swan incident this year, only the United States to raise interest rates, it is difficult to cause a substantial decline in the property market. He said that if the interest rates on mortgages were increased by 50 to 75 pips and the amount of contributions and other factors remained unchanged, a 5% to 8% cut in property prices would offset the impact. He added that the existing mortgage scheme based on HIBOR (H) has an upper limit. Therefore, unless the prime rate (P) rises, the ability to make contributions will be affected. He estimates that this year, developers will be paying more and more attention to the sale of flats. As buying land is getting harder and harder, the selling pace of flats will slow down and the asking price will be more aggressive.

Among property developers, he is optimistic about Sun Hung Kai Properties (00016) due to valuation discount of over 40%, together with the dividend payout ratio of 3.5%, there are also new projects launched each month. As for the rental shares, Swire Properties (01972) is optimistic. He pointed out that many former tenants of the Central office belonged to the East Office of Hong Kong Island and Swire had a lot of rental-related properties in the east of Hong Kong Island. He looked down on REITs amid a sustained rise in interest rates.