Archive for 十月, 2010

Govt says it will act on home prices

Financial Secretary: Stable land supply is the long-term key

Financial Secretary John Tsang said that the government will take further measures to curb speculative activity in the city’s home market if prices rise too high.

“We will ensure that there is a stable supply of land over the long term,” John Tsang told lawmakers Thursday during a Legislative Council debate on the Policy Address. “And we will adopt timely measures to reduce risks of a bubble in the property market.”

In the annual Policy Address delivered October 13, Chief Executive Donald Tsang put the housing issue center stage by announcing several programs including increasing the availability of land for housing and the supply of affordable homes.

However, a weekly survey released by Ricacorp Properties on Tuesday showed 804 preliminary sale and purchase agreements were signed last week in the secondary market at 50 selected housing estates it monitors, a 33 percent increase on the 606 deals completed a week earlier.

Home prices in Hong Kong have soared 47 percent from the end of 2008, the financial secretary noted. Compared with the previous property bubble in 1997, John Tsang said that the city’s medium and small flats are now only 11 percent cheaper while luxury homes are in fact 10 percent more expensive.

“While 840,000 Hong Kong people possess their own properties in the city, we will not carry out initiatives that will cause big fluctuations on home prices,” John Tsang said.

Carrie Lam, secretary for development, on the same day told legislators the number of new units supplied annually will not necessarily be capped at 20,000. She was referring to a promise made by the government in the Policy Address that it would make a dedicated effort to construct 20,000 new housing units in each of the next 10 years to boost supply.

Hot money inflow is also another threat to the stability of the city’s property market. John Tsang said the government was watching this situation carefully, and will not hesitate to take action.

Nevertheless, Buggle Lau, chief analyst at Midland Realty believes a strong yuan and an inflow of hot money from the mainland may stymie Hong Kong government’s effort to rein in the city’s home prices, especially in the luxury property market.

“Luxury flats have risen almost 80 percent since 2005, but for buyers from the mainland, the hike is only about 44 percent as the yuan has appreciated more than 20 percent during the period,” Lau told reporters at a media briefing Thursday.

Though the city has excluded property transactions from the investment category under the Capital Investment Entrant Scheme, Lau said that for investors, especially those from the mainland, the cheaper Hong Kong dollar is a good deal for investors – whether it brings them a Hong Kong permanent residency or not.

“Since the yuan’s appreciation is expected, the Hong Kong property market will continue to be an attractive destination for mainland investors,” Lau added.

According to data provided by Centaline Property Agency, mainlanders bought more than a third of new luxury flats worth more than HK$12 million in the first half of this year. In the mass residential market, 13.2 percent of new homes have also been bought by those from the mainland.

China Daily

(HK Edition 10/29/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-10/29/content_11474243.htm

BYD shares down 19% in past 2 days

BYD shares down 19% in past 2 days

Attendees speak next to BYD vehicles at the North American International Auto Show (NAIAS). The company’s net profit in the third quarter plummeted to 11.34 million yuan compared with 1.16 billion a year ago. Andrew Harrer / Bloomberg

Dismal Q3 result takes shine off the carmaker

The share price of Shenzhen-based carmaker BYD Ltd has dropped nearly 20 percent in the past two trading days after a dismal third quarter performance.

Shares of the Hong Kong-listed company fell 8.6 percent Wednesday to close at HK$46.65 after a 10 percent slump on Tuesday.

The company released figures Tuesday which showed that net profit in the quarter ended September 30 plummeted to 11.34 million yuan compared with 1.16 billion a year ago. It was also down markedly from a net profit of 717.05 million in the second quarter. Sluggish sales of its most popular model, the F3, did not help matters.

And although the company has made a lot of noise about promoting the development of battery-powered or hybrid cars, investors have realized that its short-to-medium term prospects lies in the performance of the traditional car business.

“BYD’s new models have failed to stand out in a competitive auto environment,” said Chen Xiaoxia, a Shenzhen-based analyst at First Shanghai Securities. “It has been surpassed by many peers as the whole industry is still growing.”

According to a report provided by Chen, auto sales on the mainland in the first nine months have risen almost 36 percent this year, far exceeding the projected 20 percent target.

BYD, nevertheless, lowered its sales goal in August from 800,000 units to 600,000 for the year, even though the group’s car sales in the first half increased by more than 40 percent from the same period last year.

The poor third quarter results surprised investors as the automaker is constantly under the media spotlight. Not only is it backed by US billionaire Warren Buffett, but it has also been very active in promoting green cars in the industry.

Launched in 2003, the auto arm of BYD has long claimed that its future plans will focused on electric or hybrid vehicles, building on the experience of its battery-making parent group.

Buffett also expects the company to “play a key role in the future of new energy technology”. He made the remarks during his first official visit to the company’s Shenzhen base in late September this year. Buffett’s firm, Berkshire Hathaway Inc, has a 10 percent stake in BYD.

“With the government’s strong support for new energy, the demand appetite for electric car and energy storage stations appears to be rising quickly. Nevertheless, battery capacity constraints remains a key near-term obstacle for BYD to benefit from such opportunities,” Charles Guo from JP Morgan wrote in a report earlier this year commenting on BYD’s business prospects.

However, the BYD production goal for its green cars is only 1,000 units in 2010. And nor is it planning to shift to mass production this year, according to Wang Chuanfu, the company chairman.

“The green car industry will definitely boom eventually, but it won’t contribute to the group in the near term,” said First Shanghai’s Chen.

“Since competition between low-end automobile makers is heating up, pressures on traditional car sales in the market are also escalating,” she added.

In the first nine months to September 30, BYD made 2.43 billion yuan in profit, up 4 percent from 2.34 billion yuan a year earlier. The company almost quadrupled earnings last year as robust demand for its F3 car made it the best-selling model on the mainland in 2009.

China Daily

(HK Edition 10/28/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-10/28/content_11467454.htm

Sept exports remain strong at 24% YoY growth

Sept exports remain strong at 24% YoY growth

Robust demand in Asia continued to underpin strong export growth in the city, but an economist has warned that a slowdown is on the way.

According to figures released by the Census and Statistics Department Tuesday, Hong Kong exports rose 24.1 percent to HK$280.3 billion in September from HK$225.9 billion a year earlier. Total imports increased 19.5 percent year-on-year to HK$304.7 billion, leaving a trade deficit of HK$24.4 billion.

“The strong momentum of expansion in merchandise exports continued in September,” said a government spokesman. “The Asian market continued to expand vibrantly, driven in particular by strong industrial production activities and investment demand.”

Total exports to the rest of Asia grew by 24.1 percent in September compared with last year. Increases were seen to most major destinations, especially the large 73 percent rise to India of exports worth HK$7.6 billion. Meanwhile, the mainland saw a 23 percent rise to HK$147.5 billion, while Vietnam and Malaysia saw increases of 35 percent and 31 percent respectively.

Demand from the US and Europe also continued to recover, though exports to these markets have yet to return to their pre-crisis peaks in 2008, said the spokesman.

Exports to the Netherlands climbed 32 percent to HK$4.0 billion, while that of the US ascended 21 percent year-on-year to HK$32.5 billion.

However, the latest export data was well behind the estimated 30 percent compiled by Bloomberg. It is also lagging behind August figures, which saw 36 percent year-on-year export growth and 28.4 percent import growth.

“The slowing trend of Hong Kong export and import figures is within our expectations, but the trend is getting worse,” said Irina Fan, senior economist at Hang Seng Bank. She added that seasonally adjusted figures have actually slumped throughout the year so far.

According to the government figures, Hong Kong’s exports on a seasonally adjusted basis rose by just 1.6 percent in the third quarter compared with the previous quarter.

This echoes the findings of a Hong Kong Trade Development Council quarterly poll of 500 manufacturers in September, where the export index dipped to 56.2 in the third quarter from 59.1 in the second quarter this year as manufacturers continue to be concerned about yuan appreciation, escalating trade friction and wage hikes.

Exports to the mainland also saw a marked slowdown at 23.1 percent in September, down 11.1 percentage points from August figures. Fan said this does not bode well for Hong Kong.

She added that the sluggish recovery of the global economy, especially the slowdown in the US and Europe will poses more challenges for the city’s export and import growth. Fan expects it to shrink until next year.

“The figures for export growth in October may stand at only 12 to 13 percent, but it may bottom out to just one digit growth (rates) next year,” Fan added.

China Daily

(HK Edition 10/27/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-10/27/content_11461662.htm

Credit Suisse remains keen on mainland growth

Credit Suisse Group AG remains bullish about the prospects for mainland companies listed in Hong Kong due to stronger-than-expected earnings growth.

After lifting its mainland GDP growth forecast earlier this month, the Swiss bank raised its 12-month forecast Monday for the Hang Seng China Enterprises Index (H-share index) to 16,000 points from 14,000, according to report released by analysts Peggy Chan and Vincent Chan.

They also raised their forecast for the MSCI China Index from 64 to 81 on strong growth and the fact that much of the index has sectors less prone to cycles such as telecoms and consumer plays.

Although figures show that mainland economic growth continued to decelerate in the third quarter, many companies nevertheless posted strong results.

Yanzhou Coal Mining Co, the listed unit of China’s fourth-biggest coal miner, Monday said it has more than tripled its third-quarter profit to 3.68 billion yuan compared with a year earlier as production rose to meet increased domestic demand.

Datang International Power Generation Co, China’s biggest publicly-traded electricity producer by market value, also said on the same day that net profit in the third quarter has more than doubled to 766.62 million yuan compared with the same period last year due to higher electricity generation.

The revised target for the H-share index follows Credit Suisse’s upgrading of its mainland GDP forecast. The bank raised its projections for 2010 and 2011 to 9.8 percent and 8.9 percent from the 9.7 percent and 8.8 on October 1.

However, another bull market similar to that during 2004 to 2008 is unlikely due to structural adjustments in the economy, the report added.

Economists at HSBC are also optimistic about the outlook for the mainland economy.

“The mainland’s firm domestic demand is likely to support around 9 percent growth next year, despite slower global economic growth reducing external demand,” Qu Hongbin, co-head of Asian Economics Research at HSBC said in an email report Monday.

The H-share index Monday rose almost 1 percent to close at 13,626.08 points. It has gained over 800 points, or 6.5 percent, in 2010.

China Daily

(HK Edition 10/26/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-10/26/content_11455971.htm

Orient Overseas sales up in Q3

Shipping firm benefits from rebound in global trade

Orient Overseas (International) Limited (OOIL) filed a report Thursday stating that its revenue rose 65.5 percent year-on-year to $1.57 billion in the third quarter. Meanwhile, total cargo transport grew 16 percent to 1.23 million twenty-foot equivalent units (TEUs) in the period ended September 30.

OOIL, an investment holding company, is the parent firm of the city’s largest container shipping firm, Orient Overseas Container Line (OOCL). The average revenue per TEU also increased 42.6 percent.

“Orient Overseas’ sales growth far overtook its shipping volume in the third quarter, which well reflected the continued recovery of the whole container shipping industry,” Kenny Tang, executive director at Redford Securities, said in a report.

Global trade in volume terms is expected to grow more than 10 percent this year, Pascal Lamy, director-general of the World Trade Organization said in July, upgrading the forecast from a previous projection 9.5 percent made in March.

This is good news for the container shipping industry, which was hit hard during the financial cris, racking up total losses of more than $15 billion in 2009, according to a report by the Paris-based information service AXS Alphaliner earlier this year.

The slowdown in global trade also led to a steep drop in freight rates in the latter part of 2008, with most shipping operators recording losses despite attempts to lower costs by cutting capacity and deferring new ship orders.

However, Orient Overseas returned to the black in the first half in 2010, posting interim profit results of $287 million after tax on August 5. Sales increased by 32 percent or $667.5 million in the first six months to $2.73 billion as US demand for Asian-made products were given a boost and freight rates on Asia-Europe routes nearly doubled.

OOIL also more than doubled its sales revenue from Asia-Europe routes in the third quarter to $354 million compared with $174 million a year ago. Trans-Pacific routes also received a revenue sweetener in the third quarter, up 69 percent compared with a year ago at $600 million.

For the first nine months of the year, aggregate sales climbed 48 percent to $4.1 billion while cargo loads rose 13 percent to 3.5 million TEUs compared with the corresponding period in 2009.

China Daily

(HK Edition 10/22/2010 page3)

http://www.chinadaily.com.cn/hkedition/2010-10/22/content_11443417.htm

New guidelines for ‘inflated buildings’

Rules issued to prevent developers from circumventing policy ahead of 2011

The Hong Kong government has issued new guidelines preventing developers from circumventing new rules to control “inflated buildings”, responding to concerns that some developers may rush to submit project applications in a bid to beat the April 2011 deadline. There were also fears that unscrupulous firms could make a claim even before acquiring a site.

But under the guidelines promulgated by the Building Authority Wednesday and effective today, a developer can only file a building project application if it actually owns or controls the site. Exemptions gained previously for developers from calculating the gross floor area will also expire if the building works fail to commence within two years.

“These guidelines provide clearer norms for relevant departments to adopt in the next few months, which also clear up doubts from the public that some people do not fully understand how these new measures actually work,” Carrie Lam, secretary for development, told reporters Wednesday.

The guidelines serve to clarify Chief Executive Donald Tsang’s new measures announced in his Policy Address last week to end the city’s worsening “inflated buildings” problem. It will impose a cap amounting to 10 percent of total floor space on green features and amenities that are permitted to be factored in when determining the size of individual apartments.

Lam said that the new policy will not be able to be enforced until next April as it requires a lot of work.

As for approved residential buildings that have yet to be built and are in breach of the new rules, Lam said the permits will still stand since the government generally does not have the powers to review them.

Environmental group Green Sense had earlier called on the government to make changes to the residential projects that it was going to build in conjunction with MTR Corp.

The group claims that six residential projects to be built above three West Rail stations and one light-rail station will have large car parks, clubhouses and shopping malls, which take up as many as seven levels and have violated the new rules.

“The approved plans will still be valid, but if they need re-approval or make a large number of amendments for various reasons in the future, we will start over in accordance with the new policy,” Lam added.

Buggle Lau, chief analyst at Midland Realty told China Daily the measures dealing with “inflated buildings” and the new guidelines would not fundamentally threaten the interests of developers.

“But the developers will definitely be more selective when choosing a land bank, and more cautious when offering a price,” Lau said.

China Daily

(HK Edition 10/21/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-10/21/content_11436978.htm

ING: City’s investor sentiment continues to rise

ING: City's investor sentiment continues to rise

Hong Kong investors are among the most sanguine in Asia, a survey shows.

According to the ING Investor Dashboard Survey index, which tracks investor sentiment across Asia, Hong Kong rose to 151 in the third quarter of 2010, up from the previous quarter’s 124 – the biggest increase in the region. It is also the highest level that Hong Kong has attained since a financial crisis low of 58 in the first quarter of 2009.

A reading above 120 on the index indicates that respondents are optimistic about economic growth while a reading below 80 indicates pessimism. It is also the first time since the second quarter of 2008 that the Hong Kong index outstripped the mainland, which rose from last quarter’s 127 to 143.

India had the highest index level in the region at 175, followed by the Philippines at 157 and Thailand at 154. Hong Kong came in fourth.

“Investors in Hong Kong and on the mainland are definitely more confident now compared with last quarter – when they were less sure how much the tightening measures imposed by the Central Government would affect the Greater China economies,” said Michael Chiu, senior investment manager at ING Investment Management Asia/Pacific.

“Now that the measures are taking effect, concerns of over-tightening are beginning to ease and investors are becoming more confident about the economy,” Chiu told reporters during a media briefing Tuesday.

The outlook on the city’s stock and property markets for the fourth quarter also strengthened. Over 60 percent of respondents are bullish about home prices in the next quarter, as well as the stock market. According to Chiu, the local bourse has reaped benefits from city’s fast economic growth, including the establishment of an offshore renminbi trading center and the uptake in the IPO market.

The Hong Kong government in August raised its full-year GDP growth forecast for 2010 to between 5 and 6 percent from the 4 to 5 percent range, supported by the city’s strong exports to the mainland and other Asian markets.

And despite remaining cautious about an economic recovery in the US, Hong Kong and mainland investors appear confident that a double-dip recession is unlikely as their economies “decouple” from the global market, with more respondents indicating that the European debt crisis is not affecting their investments, according to the survey.

Chiu expects more quantitative easing measures to be introduced in the US and other developed markets, leading to continued low interest rates and a weak dollar to help their economies.

“Instead of implementing a one-off increase in the exchange rate, we expect the Central Government to appreciate the yuan gradually for a prolonged period at a rate of 3 to 5 percent a year for the next five to 10 years,” Chiu added.

Almost 90 percent of Hong Kong respondents and 61 percent of mainland investors in the survey agree that the yuan will continue to appreciate against the US dollar.

China Daily

(HK Edition 10/20/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-10/20/content_11431621.htm

Analysts: ZTE to reap benefits from tablet PC

Analysts expect ZTE Corporation to benefit from its decision to enter the tablet personal computer (tablet PC) market, which is a hot sector right now due to the runaway success of Apple’s iPad.

ZTE, China’s second-biggest telecoms equipment maker could start selling their first model as early as January 2011, the company’s deputy general manager of mobile broadband products, Wang Yong, said Monday. It plans to roll out six other models next year as well.

The announcement follows the official launch of ZTE’s first tablet PC last week, which features Google’s free Android operating system but has yet to reach the market.

“If ZTE prices its tablet PC in the range of 2,000 to 3,000 yuan, a competitive offer compared with the hot-selling iPad, I believe sales prospects for its products will be quite promising,” said Joseph Ho, an analyst with Daiwa Capital Market.

Global tablet PC sales will reach almost 20 million this year, buoyed by strong sales of the iPad, according to figures released by information technology research and consulting firm Gartner last week. The group has forecast that sales will expand rapidly at 54.8 million units in 2011 and 208 million by 2014.

The retail price for iPad’s cheapest model was less than 4,000 yuan on the mainland – and even cheaper in Hong Kong and the United States.

Apple Inc in late June announced that it had already sold 3 million iPads just 80 days after it was put on the market in April.

The official launch of the iPad in China in mid-September also attracted hundreds of customers, who queued up for it despite the fact that it had already been on the shelves in other parts of the world for five months.

“The cheaper price suggests a very huge market for tablet PC makers,” said Ho.

ZTE has already received orders from European and Asia Pacific telecom operators for its new tablet PCs, according to the company’s Wang.

Alvin Chung, an associate director at Prudential Brokerage, said that moving into the tablet PC market is a smart move given the market potential.

“ZTE’s tablet PC even edges out iPad in some aspects as it supports the popular TD-SCDMA network while the latter does not,” said Chung.

China Daily

(HK Edition 10/19/2010 page3)

http://www.chinadaily.com.cn/hkedition/2010-10/19/content_11426044.htm

China’s private equity market set to expand, says Deloitte

Major players in China’s private equity (PE) market are bullish on the sector, with nearly 80 percent expecting to increase their investment activity over the next 12 months, according to professional services firm Deloitte.

Deloitte’s China Private Equity Confidence Survey, released Thursday, shows that 79 percent of the PE investors they interviewed are strongly optimistic about the market. This is primarily being driven by a bright economic forecast, particularly the development of yuan-denominated funds.

“All the factors are pointing to a positive outlook for the Chinese private equity market as the market is starting to recover from the economic downturn and we have also seen improved sentiment in the stock market,” said Chris Cooper, head of private equity at Deloitte Northern China.

“Coupled with the resuscitation in IPO activities – one of the viable exit routes for private equity – if the economy continues to recover, investment activities will continue to grow as we enter 2011 along with deal size and valuations,” he added.

Apart from confidence in the market regarding economic growth trends, Cooper noted that most players believe that the recent surge in domestic yuan funds is bringing a dramatic change to the PE landscape. Nearly all the respondents said they are considering setting up yuan funds as a strategic priority.

Though some respondents expressed concerns about potential conflicts of interest between yuan funds and foreign currency funds as well as regulatory challenges, Cooper believes that the appetite for yuan funds will continue to grow in the medium to long term. He added that in the first half alone, 24 yuan funds were officially set up, raising $1.13 billion in total.

“Over 80 percent of respondents believe that deal competition will become more intense in China due to the increase in the number of home-grown yuan funds and new foreign entrants,” said Danny Tong, head of private equity at Deloitte China.

PE activity is also starting to spread to more cities and not just in the key hubs of Shanghai and Beijing as well as coastal regions, he added.

“With the escalating maturity in the PE market in China, a greater penetration of investment activities into the second- and third-tier cities inland will be seen in the near future, including some far western provinces,” Tong said.

The survey also reveals that 76 percent of respondents believe that exit activity in the Chinese PE market will increase over the next 12 months, helped by a healthy mixture of supply and demand.

China Daily

(HK Edition 10/15/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-10/15/content_11412350.htm

Housing: cornerstone of Policy Address

By Oswald Chen and Li Tao (HK Edition)

Housing: cornerstone of Policy Address

Skyscrapers make up the skyline of Hong Kong. Chief Executive promised to ease the problems of soaring housing prices and land shortages in his Wednesday Policy Address Edmond Tang / China Daily

Tsang presents ‘My Home Purchase Plan’ as alternative to HOS

The Chief Executive has promised Hong Kong that he will address soaring housing prices and land shortages, with or without the cooperation of the private sector.

Donald Tsang made the housing issue the centerpiece of his annual Policy Address, as he announced programs to increase availability of land for housing; increase the supply of affordable homes and cool off the over-heated real estate market.

Land availability

He cited housing as the key issue facing Hong Kong today and identified the shortage of available land as the cause.

A land reserve will be created. If the private sector fails to apply for land sales under the Application List System, the government will act on its own to make land available for housing construction.

The Chief Executive promised that 30 hectares of industrial land across the city will be rezoned for housing. He also cited plans for additional reclamation on what he called an “appropriate scale” outside Victoria Harbour.

Tsang promised that the government would make a dedicated effort to construct 20,000 new housing units in each of the next ten years.

He predicted that the number would satisfy market demand, given that the average annual absorption rate of first-hand private residential flats has held at roughly 18,500 units over the past 10 years.

Affordable housing

The government will enhance construction of small and medium residential flats.

Tsang declared that a site at the former Yuen Long Estate will go up for tender later this year with a minimum number of units and size restrictions.

The Chief Executive called it a pilot scheme, which may be extended to other sites. The administration will discuss with the Mass Transit Railway and the Urban Renewal Authority to explore the possibility to provide more small and medium flats in their urban renewal projects and residential developments along the West Rail, he added.

Infrastructure construction at the Kai Tak Development Area will be accelerated so that some residential sites can be available in 2015, the Chief Executive said.

The government also planned to place on the market the former North Point Estate site and the Ho Man Tin site to be returned by the Housing Authority next year, as well as the sites in Tung Chung and Tseng Kwan O.

The administration will form the “Steering Committee on Housing Land Supply” that is chaired by the Financial Secretary to coordinate the efforts of the departments concerned.

Home ownership

Rejecting calls to restore the defunct Home Ownership Scheme, Tsang proposed an alternative “My Home Purchase Plan.” Under the plan, the government would build 5,000 “no frills” flats, to accommodate prospective home-buyers in the so-called “sandwich class.”

Local families with incomes under HK$39,000, financial assets under HK$600,000 who have not owned property in the last 10 years will be eligible. The administration has earmarked sites in Tsing Yi, Diamond Hill, Sha Tin, Tai Po and Tuen Mun to provide the 5,000 flats. The first project, providing 1,000 apartments in Tsing Yi will come on the market in 2014.

Prospective buyers would lease flats at a fixed rate for up to five years. At a “specified date” during the lease, tenants would be eligible to purchase their flat (or another), or move onto the private market. Half of the rental fees paid then would be rebated to provide tenants a sound basis for a down payment.

The Hong Kong Housing Society will be responsible for the plan’s operation.

“The plan aims to help the city’s sandwich class realize their dreams to have their own flats,” Tsang stressed.

The Chief Executive also committed his government to constructing 15,000 public housing flats per year to maintain the current three year waiting period for public housing.

CIES adjustments

The Chief Executive also announced changes affecting mainland investors under the Capital Investment Entrant Scheme.

The decision follows a rising outcry that investors from the mainland were overheating the real estate market by heavily investing in luxury homes to acquire Hong Kong residency.

“The government, in view of public concern, has decided to temporarily remove real estate from the investment asset classes under the scheme,” Tsang said.

The government also raised the investment requirement for residency to HK$10 million from HK$6.5 million. Both directs are effective on October 14.

Transparency in sales

Declaring that the government and the Real Estate Developers Association had been unable to reach a consensus on outstanding issues, the Chief Executive said legislation was being prepared to guarantee transparency of property transactions.

The Transport and Housing Bureau will study practicable recommendations within the next year to regulate the sale of first-hand flats, including citation of saleable floor area as the only basis for price listings.

The problem of so-called “inflated flats” will be addressed with a cap of 10 percent on the amount of “apartment features” which are permitted in the calculation of floor area. In the past, the concessions have served as a tool for developers to give the appearance of substantially greater floor space than actually is contained in flats.

Tsang said that the stability of home prices is vital and the administration will strive to prevent bubble formation in the local property sector.

Joseph Tsang, international director and head of capital markets at Jones Lang LaSalle, told China Daily that the above measures are mild and can contribute to the stability of property prices in the city.

Leung Chi Kin, deputy chairman of the Real Estate Developers Association of Hong Kong, said that the sole adoption of the use of saleable floor area for price listing purposes may lead to a surge in the selling prices of properties.

China Daily

Housing: cornerstone of Policy Address

http://www.chinadaily.com.cn/hkedition/2010-10/14/content_11407311.htm

(HK Edition 10/14/2010 page1)