Hong Kong's new giants

Chapter 543 [Counterattack from the Hong Kong Government]

5 month 26 day.

The Hong Kong government auctioned off two pieces of land in the first phase of the new fiscal year. The first piece is located in Luen Wo Hui, Fanling, with a base price of 18 billion Hong Kong dollars. According to market conditions, the media expects the transaction price to be between 28 billion and 30 billion yuan; the second piece is on Organ Street, Yuen Long. The starting price is HK$4.8 million, and the transaction price is expected to be HK$7-8 million.

The expected transaction price is naturally a rough estimate based on past experience, but everything depends on the results of the auction.Most industry insiders predict that the transaction price will be 20% to 30% higher than the government's reserve price.

The result of the auction was "upset", and it was sold at a price slightly higher than the reserve price in the absence of competition.

A piece of land in Fanling was sold for HK$20.4 billion, much lower than the expected HK$28-30 billion;
A piece of land in Yuen Long was sold for HK$5.1 million, which was more than 7% lower than the expected HK$8-[-] million.

When the news came out, the stock market suddenly took off, among which real estate stocks fell the most.

Hong Kong's major newspapers reported the incident one after another, and the "insider story" gradually "revealed".

According to the "facts" disclosed, the major Chinese businessmen and British real estate developers in Hong Kong "gathered" in the coffee room on the eve of the auction. Among them were Zhou Zhoumao from Cheung Kong, Liang Zhenxun from the new era, Guo Bingjiang and Chen Juyuan from Xindi, and Liang Zhijian from New World , Henderson Wan Man-yee, Hang Lung Chan Kai-chung and Yuen Wai-leung, Swire Properties Kan Kee-fu
People suspected that the developers had "considered the numbers" before the auction, but they later claimed that they only held a meeting on the affairs of the real estate chamber of commerce.

Some people are still skeptical about this. Auction bidding is like a battle. On the eve of the auction, every family is in a state of battle. How can this "leisure and elegance" discuss things that have nothing to do with the auction?

The auction started that day, and the auctioneer set an opening price of HK$19.8 billion (a piece of land in Fanling), plus HK$20.4 for each bid.There was no bidder for [-] minutes after the opening of the bidding. In the auction house, the word "long" can be used for [-] minutes without bidders.Afterwards, Nan Fung accepted the price first, Bapoly made a bid, and then New World raised the price to HK$[-] billion.Several major bidding consortiums "Cheet Ear Boy" were extremely busy. During the bid bidding, the consortium finally completed the grand alliance, and finally Nan Fung came forward to bid for [-] billion Hong Kong dollars.

The buyers of this land are 13 developers, they are Cheung Kong, Nan Fung, New Era, New World, SHKP, Sino, Kerry, Hang Lung, Henderson, Swire, Paliburg, Development Bank of Singapore, and China Overseas.Among them, Dagu is British-owned; Sino, Kerry, and Singapore Development Bank are overseas Chinese companies in Southeast Asia;

It is said that the total investment of the entire development plan is about HK$30 billion, with Cheung Kong as the project manager.

The second land auction in Yuen Long is simply a replica of the first land.The starting price was 4.8 million Hong Kong dollars, 1000 Hong Kong dollars per lot. After only three bids, it was completely cold, and the auctioneer only got 5.1 million Hong Kong dollars.The second land consortium has more combinations, reaching 5.In addition to the 3 consortiums mentioned above, Chuang's Enterprises and Kwong Sang Hong are also willing to join.

The journalists and "observers" who participated in the auction immediately talked about it.

Some people think that this is a gesture by the developers to the Hong Kong government. Don’t use tough measures to cool down the property market, otherwise it will affect the income from land sales. Some people worry that monopolistic organizations of developers can make amazing profits by buying low land prices.

On May 5, "Ta Kung Pao" published an editorial.The editorial said:

"It can be said that this is a rare situation in the auction market in recent years. In the past, most of the bidding was fierce and hit new highs... In fact, the (official land) land price plummeted by 5/26, after all, it is not a blessing for Hong Kong's overall economy. Take the reaction to the land sale on May [-] as an example. The stock market was the first to be affected. Real estate stocks fell sharply, and investors were at a loss...

If the land price is too high, it needs to be paid back; if the property price is too expensive, it is out of touch with the purchasing power of the people, and adjustments need to be made.This is the consensus of everyone, and we hope to see this situation appear in an orderly, gentle, and slow manner, rather than a sharp rise followed by a sharp drop. The land sale on May [-] was a product of a special environment and special factors, and should not be used as a guide, otherwise, it will increase the instability of Hong Kong's economy and be detrimental to a smooth transition...

Many people have objections to the practice of "jointly investing in land" by the developers at the land sale site on May [-].This does not mean that developers are not allowed to form a consortium to buy land, but that a disguised monopoly cannot occur.If so, it would not be a fair market.

"Capitalist" magazine said: "Before the [-]s, in the official land auction market in Hong Kong, there were often real estate developers cooperating to bid for land... With the institutionalization of the official land auction system and payment conditions, coupled with the self-discipline of real estate developers, in the past that This method of jointly lowering prices and sharing profits in private is no longer seen. This time the old trick was repeated, which aroused fierce criticism from the public."

According to the analysis of market participants, the Hong Kong government has continuously tightened restrictions on the purchase and sale of properties for more than half a year. The property market has fallen by [-]% compared with the beginning of the year. Demonstrate to the Hong Kong government, don't press every step of the way.

Some people think that real estate developers will join forces to monopolize land prices, which will reduce the government's treasury revenue. The government's money must be spent in Hong Kong, and London will not take any cents. It is not advisable for real estate developers to sacrifice government treasury revenue.

Others believe that real estate developers will not "buy and sell at a low price" after "holding out flat goods".

Words of criticism and condemnation flooded the real estate developers from all directions.

These real estate developers have just "exchanged fire" with the Hong Kong government and "won a big victory", but they have not heard a single applause.

They were immediately "isolated" in Hong Kong, which they did not expect.

Leung Chi Kin, spokesperson of the Hong Kong Real Estate Developers Association and general manager of New World Development, said: "A few days ago, real estate developers teamed up to buy land. It was not a premeditated plan to lower the land price. Eight minutes after the auctioneer opened the price that day, no one accepted the price, which made the developer Worried that if the government takes back the land, it will affect the future land price, so they decided to jointly bid.”

"After [-] minutes, no one responded to the price, and the developers were surprised. Now the property market is quiet, and property prices have fallen by more than [-]% in the past two months. In addition, the government is about to announce measures to curb property prices. Developers can't see through the market outlook, so Joint bids reduce risk."

Liang Zhijian also stated: "Not every real estate developer can spend billions of Hong Kong dollars to invest in this project. They can only jointly develop with several companies. Real estate developers do have the sincerity to cooperate with the government to combat the trend of property speculation."

Some analysts believe that Liang's explanation is not convincing. At least seven or eight companies, including New World, have independent financial resources to develop this project.What's more, unplanned flats can be sold instead of existing buildings; there is no need to take it out at one time, but it can be developed in stages for many years.

"Ming Pao" carried: "After attending a ceremony on May [-], Chairman of New World Development Cheng Yu-tung denied that the relevant real estate developers jointly lowered the land price, and said that the land price reflected that the developer was only trying to diversify investment risks."

Cheung Kong Chairman Li Chaoren attended the Huaxia Real Estate Exhibition on May [-] and emphasized to the reporters present: "There is absolutely no such thing as a demonstration against the Hong Kong government." He also said: "Under the current situation, everyone shares a small risk. That's my opinion."

However, market participants do not agree with Li Chaoren's words.

Superman's real estate in Hong Kong was at a low ebb in "1968" and "1983", and some dared to abandon it and take the risk of acquiring a large amount of land.In the auction field, Superman's "One Finger" is even more famous.

Therefore, some analysts believe that it is puzzling that Superman is so cautious and cautious, which does not match Cheung Kong's tens of billions of cash reserves.

It is said that Li Chaoren, who is "harmonious" in life, has instructed the director of Cheung Kong, Zhou Zhoumao, to resign as the project manager of the two lands, so as to avoid the market accusing Changshi of taking the lead in "contradicting" the government.

Lin Zuhui was also surrounded by reporters at an event to interview this topic. He said frankly: "At present, major developers are willing to cooperate with the government to crack down on the property market. It is not appropriate to chase high investment land, so everyone disperses investment. Real estate adjustment It is inevitable, and this situation is conducive to those who just need to buy a home."

According to media analysis, Lin Zuhui's family has a big business. Judging from his attitude and behavior, he doesn't seem to care much about real estate profits; the addition of New Era Group this time is just to take advantage of the trend.

On June 2, the Hong Kong government, which lost "silver paper" and "face", launched more severe measures to crack down on speculation:
Medium and long-term measures: plan to increase the land supply within a few years, and increase the supply of "medium price" units in public housing and private buildings to ensure the stability of the property market.

The measures in the first phase include: internal subscriptions are reduced from [-]% to [-]%; off-plan flats can be sold [-] years before occupancy, and off-plan flats can only be sold [-]-[-] months before occupancy; property purchase deposits are increased from the current [-]% to [-]%, and so on.

A relevant official of the Hong Kong government said that the reduction of government tax revenue is not the most important consideration, but the most important thing is to enable ordinary citizens to buy ideal flats.

Hong Kong real estate developers "assessed the situation" and wisely issued a statement expressing their "approval in principle" of the Hong Kong government's measures to crack down on speculation.

Leung Chi Kin, spokesman of the Hong Kong Real Estate Developers Association and general manager of New World Development, expressed support in principle for the Hong Kong government's measures to curb property prices, and believed that the measures could effectively prevent speculators from entering the market.However, there are reservations about the measures to shorten the time for selling flats and restrict buyers to resell the property after signing the contract.

He said: "The measures announced this time are very comprehensive. They include short-term measures to combat speculators entering the market, curbing property prices, and long-term measures to increase land supply, which can alleviate the tight housing demand in Hong Kong. The Real Estate Developers Association will try its best. Cooperate with the government to comply with and implement the announced measures."

After the implementation of the measures, speculation in Hong Kong's property market has gradually faded, and property prices have fallen.

Users are happy, speculators are sad, and developers are mostly pessimistic.

In the conference room of the New Era Group, Lin Zuhui convened some high-level executives to formulate a new strategy.

Lin Zuhui said: "Official land auctions will still be purchased as usual, but it should not be too prominent. It is enough to be able to secure the four major development real estate developers in Xiangjiang and maintain a stable land reserve."

He doesn't participate in official land auctions very much now, so I would like to remind everyone.Of course, before each official land auction, he must have detailed information and plans, and he will communicate with Chen Bin and the others.

Chen Bin nodded and said, "Okay, I understand what the boss means."

Everyone agreed and understood the boss's attitude. New Times Group now has a large proportion of comprehensive investment and is no longer a pure development real estate developer.

Lin Zuhui also said: "Although the residential properties have fallen by 15% this year compared with the beginning of the year, the market transaction will not encounter a severe cold immediately. The sales department should pay close attention to selling real estate. The price should not be driven by further price reductions, but some promotional activities can be carried out, such as lucky draws to give gold, European and American tourism. In short, we need to put more thought into selling, but don’t take the lead in lowering prices.”

This so-called price reduction means 'not to beat the bad market'. The price of the surrounding real estate is what it is, so it is not to engage in vicious competition.

Chen Xiaofen said: "Okay, we must put more effort into sales."

Lin Zuhui nodded, and said to everyone: "Actually, even if the sales of New Times Group are not good during this adjustment period, the impact on the group will not be particularly great. And I always believe that this adjustment is caused by internal challenges, far from External factors are so deterrent. Therefore, once the adjustment period is over, housing prices will rise sharply again, which is why I am not in a hurry.”

Everyone has always been very positive about the analysis of their boss.

Liang Zhenxun nodded and said, "There is no problem with finances either!"

Although the boss has arranged another 50 billion Hong Kong dollars in stock investment, out of trust in the boss, Liang Zhenxun believes that these investments will have very considerable profits.For example, the U.S. stocks invested in have a profit of about 10% this year, and the total market value has reached 10 billion U.S. dollars (total investment of 4.5 million U.S. dollars).

In addition, the company can still have a lot of income this year, and it is not impossible to save 80 billion to 100 billion by the end of the year.

Soon, everyone knew how to develop in the next year or so.

(End of this chapter)