End of "obscene" profits for Hong Kong property firms
HONG KONG (REUTERS) - Hong Kong's home builders are bidding cautiously on land to develop, wary of shrinking profit margins as the city's new leader pushes for more affordable housing in the world's most expensive residential real estate market.
Property developer Cheung Kong Holdings, founded by Asia's richest man, Mr Li Ka Shing, bought only one new plot in the city in the first half of this year, an unusually quiet span for Asia's No. 2 developer by market value.
On Aug 10, Cheung Kong spent HK$9.6 billion (S$1.54 billion) on a huge site above a subway station, but on condition set by the subway operator that half of the 2,384 flats are small, affordable apartments of not more than 540 sq ft. Such units tend to generate slimmer profit margins.
"We were in a situation where they (developers) were making extraordinary, if not obscene, profits," Mr Nicholas Brooke, the chairman of the real-estate consulting company Professional Property Services, said. "Now we'll return to where markets are a little bit more acceptable."