In depth after cash splash, mainland property developers flounder in hong kong – caixin global emoji gas station


“It seems that they (Chinese mainland developers) can’t even survive for one year now that they hardly come to Hong electricity worksheets ks1 Kong to buy land,” said Ronnie Chichung Chan, chairman of Hong Kong developer Hang Lung Properties Ltd. It would be difficult for mainland real estate companies to take root in Hong Kong given that they had not experienced the previous property bear markets in the financial hub, Chan predicted in a 2017 letter to the company’s shareholders.

Mainland developers haven’t been in the Hong Kong property market for long. In 2011, when Hong Kong-listed China Overseas Land and Investment Ltd. — the real estate arm of state-owned China Overseas Holdings Ltd. — poured about HK$580 million ($74 million) into a piece of land there, it was one of the first mainland companies to acquire a residential parcel in Hong Kong.

The turnover cycle for residential properties in Hong Kong usually rounds up to two or three years. That said, mainland developers had expected greater returns from selling in 2018. Unfortunately for them, the market has been trending downward since the electricity electricity music notes middle of last year. At the end of December, the price indexes for private residential properties compiled by the Hong Kong government had fallen about year 6 electricity 9% in five months. That month, Hong Kong saw a total of 2,060 residential unit deals — a drop of 61.4% from the previous year, according to data from Hong Kong’s land registry office.

Mainland developers’ reduced liquidity has also restricted their market activity. Once able to take out huge loans from banks or large consortiums to finance investments in Hong Kong, they’re now unable to do so after the Chinese government tightened rules in August 2017 for offshore property investment, and later reigned in foreign exchange.

In contrast, Chinese companies could more easily raise money after a 2015 decision relaxed restrictions on corporate bond issuance. In 2015 and 2016, mainland real estate firms raised 583 billion yuan ($87 billion) and 1 trillion yuan, respectively, through such bonds, according to a research report by Sealand Securities. Bond issuances increased 288% year on year in 2015, and 75% in 2016, providing the mainland developers sufficient capital to expand gas leak east los angeles in Hong Kong, the report said.

In addition, mainland developers use a very different pricing mechanism from their Hong Kong counterparts, said Patrick Chau, a deputy senior director at real estate services provider Savills. Hong Kong developers typically bid on land with careful calculations based on current property prices and construction costs with a profit ratio set at about 15% to 20%, while e payment electricity bill mp mainland developers seem more aggressive when bidding as they tend to think that house prices will keep rising and that future property prices should be adjusted according to the current cost for land at auction, Chau told Caixin.

Analysts also pointed out that the longer turnover cycle in Hong Kong could be a challenge for mainland developers that had long pursued the “fast turnover” model. On the mainland, it takes six to 10 months on average for a large developer to go from acquiring land to selling property, data from real estate data provider CRIC show. In Hong Kong it generally takes three years, said Huang Zhiliang, an analyst at Bloomberg Intelligence, who added that such a turnover cycle poses more risk and puts pressure on mainland developers.

Mainland developers may have become more low-key, but they still have plenty of interest in the market. In 2018, mainland firms participated in 73% of all residential land bids, according to data from Jones Lang Lasalle hp gas online login Inc., though far fewer mainland developers actually acquired land. Mainland buyers seem to place more interest in smaller and less costly parcels, many of which cost less than HK$1 billion, multiple industry sources told Caixin.