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4-Traders Homepage  >  Equities  >  Stock Exchange of Hong Kong  >  Henderson Land Development Co., Ltd.    0012   HK0012000102

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Henderson Land Development : Hong Kong central bank unveils fresh measures to check property price surge

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05/19/2017 | 01:18pm CEST
Land development at the Kai Tak area, which is the location of city's former airport, in Hong Kong, China

Hong Kong regulators announced new prudential lending measures on Friday to cool a red-hot property market, moving for the second time in six months to discourage buyers from pushing up residential prices that are already at record highs.

Hong Kong's real estate is among the most expensive in the world and latest government data showed property prices in March surpassed a peak hit in September 2015 amid increasing volumes.

The surge has come as mainland Chinese companies are increasingly making their presence felt in Hong Kong's primary market while mainland buyers form an increasing proportion of the secondary residential market.

Skyrocketing property prices have added to growing discontent in the city, with its population already under strain from high living costs and a widening wealth gap.

Norman Chan, the head of Hong Kong's de facto central bank, the Hong Kong Monetary Authority (HKMA), said the fresh measures include raising the risk-weighted floor to 25 percent for new mortgage loans, lowering the loan to value ratio by 10 percentage points and trimming the debt servicing ratio.

Chan told a media briefing that keen competition for mortgage business in the banking sector has heightened the risk of overheating in the property market, and weakened the resilience of banks to cope with a downturn in the market. 

"Given these developments, the HKMA considers that there is a need to introduce new measures to strengthen the risk management of banks," he said.

The measures come after the government raised stamp duties on home purchases in November and as the central bank has raised interest rates twice since December following the U.S. Federal Reserve's actions. But they have failed to dampen a buoyant property market.

Worryingly, rising prices have been accompanied by growing volumes and record primary land auction sales. Transaction volume for residential properties has doubled to about 7,000 in April 2017 from January this year, according to government data.

On Tuesday, Henderson Land Development snapped up a rare commercial site in the heart of Hong Kong's central business district for HK$23.3 billion (£2.3 billion), setting a fresh record for land sold by the government in the city.

The HKMA said all the new measures take effect immediately.

Market watchers believe the new measures won't trigger a correction in prices with more measures likely in the coming months as the majority of the overseas buyers tend to be cashed up mainland buyers.

"The majority of overseas property buyers are mainland Chinese," said Thomas Lam, senior director of Knight Frank. "The new measures will not have a big impact on mainland Chinese buyers."

(Additional reporting by Umesh Desai, Twinnie Siu, Donny Kwok and Clare Jim; Writing by Saikat Chatterjee; Editing by Richard Borsuk and Muralikumar Anantharaman)

By Venus Wu and James Pomfret

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Financials ( HKD)
Sales 2017 25 240 M
EBIT 2017 9 187 M
Net income 2017 11 985 M
Debt 2017 28 674 M
Yield 2017 3,14%
P/E ratio 2017 14,14
P/E ratio 2018 14,19
EV / Sales 2017 8,20x
EV / Sales 2018 7,96x
Capitalization 178 233 M
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Mean consensus HOLD
Number of Analysts 19
Average target price 50,6  HKD
Spread / Average Target 3,3%
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NameTitle
Shau Kee Lee Chairman & Managing Director
King Yue Lee Executive Director-Finance Department
Yuk Lun Cheng Senior General Manager-Engineering Department
Ying Chee Yip Executive Director
Kwok Lam Suen Executive Director
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Sector and Competitors
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MITSUBISHI ESTATE CO L..-9.70%26 063
WHARF HOLDINGS LTD28.24%25 771
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