Henderson’s Lee Sells Shares to Buy Land in Hong Kong
Chia-Peck Wong
Bloomberg
Hong Kong
Friday, 30 October 2009, 6:32pm CCT
Billionaire Lee Shau-kee said he has
sold as much as
30% of his Hong Kong
stock investments and is
buying land, betting that the government’s
efforts to cool home prices won’t work.
Lee, chairman and controlling shareholder of Henderson Land Development Co., has put HK$20 billion (US$2.6 billion) of proceeds from the sale of shares into real estate, he said at a press conference in Hong Kong yesterday.
Hong Kong’s third-richest man is
increasing his holdings as the government tries to rein in a 28% surge in home values that’s sparked tensions with the city’s developers. The government has raised down payments for luxury apartments and threatened to intervene if the market becomes “unhealthy.”
“
The new mortgage measures are not going to have much impact on luxury home prices,” said Lee, 81, whose wealth was estimated at $9 billion by Forbes Magazine in March. “Most of those buyers are tycoons and don’t need to take up mortgages to buy.”
While luxury home prices have been rising, a weekly measure of Hong Kong homes priced at less than HK$10 million -- the Centa-City Leading Mass Index -- declined 0.3% for the week ended Oct. 25.
Some buyers have been holding off in hopes they “will benefit since the government doesn’t want prices to continue rising,” said Wong Leung-sing, an associate director at Centaline Property Agency Ltd., which produces the index with City University of Hong Kong.
Henderson Land rose 7.5% on the Hong Kong stock exchange to HK$55.80, making it today’s best-performer on the Hang Seng Property Index. The shares snapped a five-day decline spurred by concern that government attempts to rein in speculation would hurt earnings.
Sales Tactics
Lee’s comments came as Hong Kong Financial Secretary John Tsang stepped up criticism of developers’ sales tactics and expressed concern that the boom in the luxury market would spread to smaller apartments.
“Developers should not mislead the market or distort the public’s views on the market,” Tsang told legislators yesterday, according to a transcript on the government’s Web site. “I’m concerned about the confusion over the recent sales tactics and transacted prices of the primary residential market.”
Lawmakers have criticized Henderson for renumbering floors in its 39 Conduit Road development. The top floor of the 46- story building was labeled 88 because the number is considered lucky in Chinese.
“Our clients like auspicious numbers and it’s common for Hong Kong developers to omit some floors,” Lee said yesterday. The floor-numbering was specified in the developer’s brochures and is “nothing special,” he said.
'I Don’t Lie'
Lee also said the HK$439 million price paid for a duplex in 39 Conduit Road was “100% real.” Henderson claimed the HK$71,280 psf price was a record for Asia.
“
I don’t lie,” Lee said. “
Buyers like these apartments as they are similar to rare jewelry. The
more expensive it is, the
more the buyers like it.”
The increase in luxury prices hasn’t affected the mid- segment market, he said. An apartment larger than 1,000 sqft (93 sqm) is categorized as luxury under local industry standards.
Hong Kong luxury home prices rose 28% in the first nine months of 2009, according to Colliers International. On Oct. 14, Hong Kong Chief Executive Donald Tsang expressed concern that a property bubble may be forming.
The Hong Kong dollar is pegged to the U.S. currency, so a decline in the U.S. dollar makes the city’s assets cheaper for non-residents, boosting demand further.
Depreciating Dollar
“With the depreciation in the dollar,
if you don’t buy fixed assets,
you will lose money,” Lee said.
Henderson Land and partner New World Development Co. will pay HK$9.6 billion ($1.24 billion) for a building site, Lee said. Henderson is also spending more than HK$10 billion buying old buildings for redevelopment.
Values of homes of at least 160 sqm have broken a previous record set in the third quarter of 1997, the Hong Kong Monetary Authority, the city’s central bank, said in an Oct. 23 statement to banks when it tightened downpayment requirements.
Henderson and New World agreed to buy an agricultural site from the government and convert it to residential use, with an allowed 2.95 million square feet of floor area, Henderson said in a Hong Kong stock exchange statement yesterday.
The average price is HK$3,253 psf, according to the statement. Henderson units will pay HK$6.53 billion. Of that, HK$5.45 billion will be paid by the company, with outside shareholders in the units paying the balance.
Henderson’s Land
Henderson owned 32.4 million sqft of agricultural land in Hong Kong as of June 30, the biggest among the city’s developers, the company said in August.
The developer also has paid HK$4.2 billion for nine old buildings it bought to redevelop in Hong Kong, and expects to pay another HK$6 billion for similar acquisitions, it said in the statement.
Lee ranked third in Forbes Magazine’s list of Hong Kong’s wealthiest people published in March, behind Li Ka-shing and the Kwok family of Sun Hung Kai Properties Ltd.
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Originally Posted by Snail
The total tally for primary market sales last month came in at about 700-800 units - down significantly from the 1,143 private homes sold in September.
