New World boss Adrian Cheng joins chorus asking Hong Kong officials to aid stagnant sector by easing cooling measures


New World Development CEO Adrian Cheng Chi-kong on Friday joined a chorus of property-sector voices calling on the government to ease cooling measures it imposed on home purchases more than a decade ago, as the company announced a 28 per cent decline in profit attributable to shareholders for the year ended June 30.

Profit attributable to shareholders came in at HK$901 million (US$115 million) from HK$1.25 billion a year earlier, while net profit declined 5 per cent to HK$4.08 billion, compared with HK$4.3 billion a year earlier. Revenue generated from property sales increased about 57 per cent year on year, with contracted sales in Hong Kong landing at HK$8.86 billion.

Cheng said the government should shorten the period that non-permanent residents who enter Hong Kong under the government scheme to attract talent have to wait to get a refund of stamp duty they pay when buying a home, currently seven years. Doing so would be “beneficial to Hong Kong’s long-term development”, he said during an online briefing following the results announcement.
Anticipation about an easing of the cooling measures has grown since the government gave its strongest hint yet on Wednesday, when Financial Secretary Paul Chan Mo-po said that the conditions that prompted authorities to impose a series of measures starting in 2009 no longer prevailed.
Adrian Cheng Chi-kong, CEO of New World Development, speaks during Hong Kong Fintech Week in Hong Kong on October 31, 2022. Photo: Bloomberg

“I agree that the current property market situation is completely different from the time when these measures were introduced,” said Cheng, who is also New World’s executive vice-chairman.

Cheng said he hopes that the government will ease the curbs in phases, and in response to changes in the market environment, as a relaxation would unleash the public’s purchasing power, boosting economic development and improving the social atmosphere.

The company cut its final dividend by 80 per cent to HK$0.30 per share, compared with HK$1.50 previously. The reduction aims to retain cash for the company’s plan to repurchase bonds. Together with an interim dividend of HK$0.46 per share, the full-year dividend amounts to HK$0.76, compared with HK$2.01 a year earlier.

“When market conditions encounter challenges, especially in a sustained high interest rate environment, we need to retain cash and strength,” Cheng said, emphasising that this is a one-off dividend reduction. “When the general environment improves and local profits continue to rise, the dividend level will stabilise,” he said.

New World, controlled by one of Hong Kong’s richest families, will launch six new project phases next year, providing around 3,000 units. As of June 30, it had a total of 1,681 residential units available for sale in Hong Kong.

Developers set to delay flat sales until government eases cooling measures

No date has been set for a sales launch at the company’s troubled Pavilia Farm project atop Tai Wai MTR station in the New Territories, as the developer said it needs to discuss the matter with the landlord, MTR Corporation. In 2021, New World sent shock waves through the industry when it announced that it would tear down and rebuild two of the project’s seven tower blocks due to faults in walls at the podium level. No sales have taken place since then.

Hong Kong’s housing market remains mired in a slump, as multiple headwinds, including the economic outlook, elevated interest rates and a glut of new flats, continue to weigh on buyer sentiment.

Lived-in home prices in August fell 1.4 per cent month on month, the fourth straight month of decline, according to government data released on Wednesday.

Analysts widely expect home prices to drop by about 5 per cent by the end of this year, after seven major lenders, including the three note-issuing banks – HSBC, Standard Chartered Bank and Bank of China (Hong Kong) – said they would raise their mortgage rates last week.
This year, the Hong Kong Monetary Authority has raised the city’s base rate to 5.75 per cent – the highest level since December 2007 – in lockstep with the US Federal Reserve to keep the local currency’s peg to the US dollar.


Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button