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Hong Kong private-home completions set to hit 10-year high

HONG KONG — The number of private-home completions in Hong Kong this year will reach its highest since 2004, said the government yesterday, further pressuring developers after a series of cooling measures forced them to cut prices.

HONG KONG — The number of private-home completions in Hong Kong this year will reach its highest since 2004, said the government yesterday, further pressuring developers after a series of cooling measures forced them to cut prices.

The number of flats forecast for completion this year is around 17,610 — a 113 per cent increase from a year earlier, said the Rating and Valuation Department.

The government said close to 61 per cent of completions would be in the New Territories district close to mainland China, where major developers such as Sun Hung Kai Properties and Cheung Kong Holdings are very active.

With the surge in new home supply, competition to lure buyers could trigger even steeper discounts and further eat into developers’ margins in one of the world’s most expensive housing markets, said analysts.

Hong Kong developers enjoyed gross profit margins as high as 40 per cent in 2009 and 2010, Ms Nicole Wong, CLSA’s regional head of property research, was quoted by the South China Morning Post as saying.

However, for projects on sites that developers bought in the past few years, margins have shrunk to between 20 per cent and 25 per cent, she added.

A UBS report in February also said profit margins for the city’s six major developers would fall from 36 per cent in 2012 to 20 per cent next year and 14 per cent in 2016.

Hong Kong private-home prices have more than doubled — rising nearly 120 per cent — since 2008.

Despite a series of steps to curb prices, such as higher stamp duties and mortgage restrictions since October 2009, prices for private properties rose 8.6 per cent last year, said the government.

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