Henderson eyes cheap land and HK property rebound

Developer Henderson Land plans to persuade the Hong Kong government to sell agricultural land so it can take advantage of cheaper prices as the property market weakens, an executive said yesterday.

Property firms who bought land in a slump during a 2003 outbreak of the SARS respiratory disease, including heavyweight Sun Hung Kai Properties, notched up big profit margins when they built on it as the market recovered.

Henderson Land would try to follow a similar tactic, company vice chairman Colin Lam said.

"Property prices have fallen this year and future land premium payments will also be lower," said Mr Lam after a shareholders' meeting.

"The company will take advantage of that to up its land bank in the city."

A Reuters poll of analysts earlier this month showed apartment prices were expected to slide more than 20 per cent by the end of next year.

A Hong Kong University index, which is based on real transactions, shows home prices Hong Kong slipped 6.3 per cent from a peak at the end of March to the end of September.

But brokers GFI say that indicative property derivative levels suggest that investors believe prices will reach the bottom of a trough in December next year, falling 30 per cent from last March level.

Reflecting the downturn, Sun Hung Kai cut its apartment sales target last week by a fifth, and the firm has seen stronger sales at its projects in recent weeks than many rivals.

But Henderson's chairman, Lee Shau-kee, insisted Hong Kong's property market had already bottomed, and would pick up towards the end of of next year, even though he believed the worst of the global economic slowdown was yet to come. "The worst for the local property market has already been seen this year. The property market has now stabilised," Mr Lee said.

"We hope the overall market will pick up in the second half."

Mr Lee, adding his voice to other optimistic predictions by Hong Kong developers, said his firm was well protected because it did not buy land when the market was at its peak earlier this year.

Sun Hung Kai Properties said last week it expected a five per cent rise in Hong Kong property prices next year.