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Hong Kong property tycoons bank on middle class to weather tough times

Published on Feb 28, 2014 6:19 AM

HONG KONG (REUTERS) - When things get choppy at the top of the property ladder, it pays to have your feet planted on the middle rungs, which makes developers Cheung Kong (Holdings) and Sun Hung Kai Properties the best bets to weather the storm brewing in Hong Kong.

These powerful property developers are targeting middle-class, first-time buyers who are exempt from the impact of government cooling measures at a time when secondary home transactions are hovering at a 17-year low.

"This represents a large potential market for developers launching new projects, so long as they price units affordably and draw first-time buyers from the secondary to the primary market," said Mr Raymond Liu, a property analyst at brokerage Macquarie. First-time buyers comprised 70 per cent of the market last year, up from 53 per cent in 2011, Mr Liu said.

With 45 per cent of its saleable units this year aimed at mass-market buyers, the highest among its peers, Macquarie has identified Sun Hung Kai as a potential winner in this market, although success will come at the expense of profit margins.

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