LI, Tao @ Hong Kong

Chinachem Sales Director Ng Shun-mo raises a bid during the government land auction Tuesday. The Hong Kong government auctioned a luxury residential site in Kowloon Tong with a final price of HK$1.63 billion, a record for the Kowloon Peninsula. Edmond Tang / China Daily

Chinachem sets new record on Kowloon side

Land prices in the city’s Kowloon peninsula hit a record high after unlisted developer Chinachem Group bought a site in Kowloon Tong for HK$1.63 billion at the government’s land auction Tuesday.

The site at 3 and 5 Ede Road was sold for HK$17,976 a square foot, beating estimates compiled by Bloomberg and Reuters.

Bidding was primarily between Chinachem and Kerry Properties Ltd. The latter bought the adjacent site at 1 Ede Road in August, which at that time broke the previous price record for the peninsula.

“We’re very optimistic about property prices in this area,” said Chinachem’s Ng Shun-mo, the company’s sales director.

“Even though we paid about HK$1,000 higher per square foot than we expected, we still think it is a good investment.”

The company intends to develop the land into a 12-story luxury residential complex with 48 units as demand in that segment in the city remains vigorous, Ng said.

“We expect to sell the flats at a per-square-foot price of HK$22,000 to see some reasonable returns,” Ng added.

Auctioneer G.M. Ross, deputy director of the Lands Department, said the sale was a reflection of market expectations. However, he declined to comment on the general impact of land sales on the government’s Policy Address today.

Chief Executive Donald Tsang is expected to announce new subsidies for homebuyers to help alleviate concerns about the city’s overheating property market.

About a dozen placard-wielding protesters briefly interrupted bidding Tuesday at the land auction, claiming that the city’s home prices are becoming unaffordable and that the government and the developers should be held responsible for it.

Property prices have risen close to 50 percent since the start of 2009 due to record-low mortgage rates. They are also rising in anticipation of future inflation, claims local firm Centaline Property Agency Ltd.

However, James Cheung, director of Centaline Surveyors Ltd said that with the booming economy and buoyant demand lending support to city property prices, the government is quite limited in the measures it could take to rein in property prices.

Yu Kam-hung, the Greater China senior managing director at CB Richard Ellis, told China Daily that though land prices are expensive, the best long-term solution would be to increase supply.

China Daily

(HK Edition 10/13/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-10/13/content_11402103.htm

A VivoPlus shop in Yau Ma Tei. China Resources Retail (Group) Co Ltd is making inroads into the health and beauty products retailing sector as it targets young consumers. Provided to China Daily by China Resources

Retail arm eyes young people, mainlanders

China Resources Retail (Group) Co Ltd, the retail arm of blue-chip conglomerate China Resources Enterprise Ltd, is making inroads into Hong Kong’s health and beauty products retail sector as it targets young consumers.

It opened up its first two pharmaceutical and beauty retail shops in Yau Ma Tei and Tin Shui Wai Friday under the name “VivoPlus”. It sells pharmaceutical and beauty products similar to that sold by the city’s dominant players, Watsons and Mannings.

“With the opening of VivoPlus, we are able to expand our business scopes to the health and beauty sectors, while more innovative ideas are enhanced in the overall retail and customer experience,” said Simon Mak, VivoPlus general manager Friday.

The store provides health care, personal care, skin care and cosmetics products. According to Mak, VivoPlus has more than 5,000 varieties of different products.

Jessica Law, marketing controller at VivoPlus, said the retail group came up with the idea last year, particularly in view of the huge purchasing power of mainland tourists.

The company plans to invest HK$500 million in the new brand initially, said Mak.

The opening of the Yau Ma Tei and Tin Shui Wai stores is just the first stage of the company’s business plan for its newly launched retailing brand, he said.

China Resources Retail now runs a number of supermarkets in Hong Kong, and its flagship supermarket China Resources Vanguard Shop is the third largest supermarket chain in the city, though it remains far behind market leaders Wellcome and Park’n'Shop.

The next stage would be to expand to the mainland market in 2011, Mak added, without elaborating.

However, the site selections of the first two shops brings about concerns as one analyst said that China Resources has picked two unfavorable locations for their first two shops – both of which will find it difficult to attract the amount of young people it is targeting.

“Tin Shui Wai is one of the lowest-income areas in the city and Yau Ma Tei, though adjacent to Mong Kok, attracts far less traffic compared with the latter. If the brand is designed to serve young people, why don’t they open up stores in Causeway Bay or Mong Kok which collect the most people as well as tourists?” said Lawrence Chor, an analyst with Taifook Securities.

Chor also believes it will not be easy for VivoPlus to gain a market in the city when Watsons and Mannings are selling almost the identical products. And they are spread out over every corner of Hong Kong.

“VivoPlus needs to figure out its real forte,” Chor added. “Selling the same products at more competitive prices might be a good option.”

China Daily

(HK Edition 10/09/2010 page3)

http://www.chinadaily.com.cn/hkedition/2010-10/09/content_11386945.htm

Hong Kong’s manufacturing activity expanded at its highest rate in four months, helped by the sustained growth of new orders and output, according to a survey of purchasing managers by HSBC released Tuesday.

The HSBC Hong Kong Purchasing Managers Index (PMI) rose to 52.8 in September from 52.3 in August.

A reading above 50 indicates manufacturing activity is expanding, while a reading below that signals contraction. PMIs are designed to provide a snapshot of business conditions in manufacturing. It’s also seen as a measure of the real economy. The September data also showed that manufacturing activity in Hong Kong recorded its 14th successive month of growth dating back to August 2009.

“All key sub-indices improved in September. It appears that business activity is once again strengthening in Hong Kong versus the prior short period where we witnessed a cooling off,” said Mark McCombe, chief executive of HSBC Hong Kong.

New orders stepped up the pace, rising to 53.8 in September from 53.3 in August – the 15th month of continued expansion.

Output also expanded at the highest rate in five months. This also pushed up the pressure on operating capacity as the backlog of work climbed for a second straight month.

September data also signals a modest increase in private-sector hiring, suggesting that companies were still aiming to boost capacity to accommodate increased workloads.

“Moving on from a month of stellar data-points in August, September’s HSBC PMI is signaling onwards and upwards for Hong Kong – defying concerns about wavering external demand and any knock-on effect for the economy,” HSBC economist Donna Kwok wrote in an email comment.

Improving global economic conditions was cited as a major reason for the strong figures in the survey by some respondents. However, new orders received from the mainland recorded a contraction for the first time since May 2009 as the China sub-index reading slipped to 49.8 in September from 52.6 in August.

Despite the weaker new business flows from China, Kwok said the ability of Hong Kong businesses to continue winning new business offers reassurance to those who worry about Hong Kong’s disproportionate reliance on mainland demand.

“The increasing new business orders will drive the local job market and ultimately support domestic demand in the city, which is in addition to continued mainland support for Hong Kong’s retail and real estate sectors,” said HSBC’s McCombe.

The HSBC Hong Kong PMI is derived from indexes measuring changes in different aspects of the private sector economy including new orders, output, employment, suppliers’ delivery times and stocks of goods purchased.

http://www.cdeclips.com/en/hongkong/City_economy_continues_to_strengthen/fullstory_52804.html

Mainland developers took a knock in Hong Kong trading Thursday after the Central Government unveiled further measures Wednesday evening aimed at cooling down the country’s booming real estate market. Analysts also voiced concern that further tightening measures may be on the way.

China Resources Land Ltd slumped 4.4 percent to close at HK$15.78, Shimao Property Holdings slid 3.0 percent to HK$12.90, and China Overseas Land & Investment fell 2.4 percent to HK$16.42. Meanwhile, Guangzhou R&F Properties Co, the biggest real estate company in southern China, dropped 2.15 percent to HK$10.90.

The Central Government Wednesday ordered banks not to provide loans for third home purchases and subsequent, while down-payments on all home purchases will now have to be at least 30 percent from 20 percent previously.

It also urged banks to strengthen their oversight of consumer loans, banning them for the purpose of buying homes. The measures also limited the number of homes that people can buy in cities where property prices are too high, have risen too quickly or where supply is tight. Furthermore, the government is calling for work on a property tax pilot program to be sped up and gradually expanded across the country.

In a note released Thursday, Credit Suisse advised investors to continue reducing their exposure to mainland property stocks for the near term as it says new measures are yet to be fully reflected in the Hong Kong share prices of these developers.

Analysts also voiced concerns about the possibility of further tightening measures.

“While the latest cooling-off policies are largely in line with market expectations, the mortgage terms are stricter,” KGI, a brokerage firm, said in a research report. It added, however, that mainland property plays could rebound in the near term as new measures were widely expected and already factored in.

Investors on the mainland certainly interpreted it that way Thursday as Shanghai-listed property firms closed higher. China Vanke, the country’s largest developer, leapt 7.6 percent to 8.40 yuan. Poly Real Estate Group climbed 8.9 percent to 12.36 yuan, while Gemdale gained 5.3 percent at 6.42 yuan.

However, David Ng, head of regional property research at the Royal Bank of Scotland NV (Hong Kong), told China Daily that more austere measures are likely to be announced around the national holiday period. He believes the latest tightening measures are only an extension of the Central Government’s April moves, which proved insufficient in cooling off the market effectively.

“If the main round of policies failed to curb prices, we can’t place much expectation on its extensions,” said Ng.

Since April, the Central Government has introduced a series of tightening measures targeting the property market.

However, just a few months after the measures put a temporary halt on property prices, the market has begun to heat up again. Transaction volume grew rapidly in August compared with July, while property sales rose about 15 percent month-on-month to 353.3 billion yuan.

Ng said that the tightening measures taken in April were considered the “most severe” so far. But he also warned that if they failed to curb the market, doing so in future will become even more difficult. The next round of tightening will have to be “rigorous” or else “it will be hard to produce any results,” Ng added.

China Daily

(HK Edition 10/01/2010 page3)

http://www.chinadaily.com.cn/hkedition/2010-10/01/content_11371648.htm