The 6 New Initiatives will not Suppress the Housing Price Boom in Hong Kong

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Cleopatra Fitzgerald
5 years ago
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1 Equity Research 股票研究 Sector Report: Johnny Wong 王俊浩行业报告 : 房地产行业 johnny.wong@gtjas.com.hk 行业报告证券研究报告 Equity Research Report Sector Report The 6 New Initiatives will not Suppress the Housing Price Boom in Hong Kong 香港六项房屋新措施将不会压抑住宅价格升势 The 6 initiatives have basically not created new housing supply. We note that the government targeted to raise public housing supply at the expense of private housing, such as reallocating the 9 private housing sites in Kai Tak and Anderson Road Quarry for public housing development. The new Start Homes project in Ma Tau Wai Road, which was considered to be sold as private homes, is too small in size to resolve the housing problems in Hong Kong. The increase in concession won t fill up the supply gap in the Home Ownership Scheme. The speeding up of sale of unsold first-hand private residential units in completed projects means less for sale in the next few years. The government aimed to push unsold first-hand private residential units for sale as soon as possible by introducing vacancy tax. However, given the inelastic nature of housing supply, total supply of residential units in the coming 3 to 4 years should be relatively fixed. In other words, if property developers rush to sell the 9,000 units due to the vacancy tax, there will be fewer units available for sale in the next few years. Besides, property developers may easily get around the new vacancy tax by slowing down construction schedules for projects under development or simply rent out unsold units under short leases. Therefore, we do not expect that the government s new move will effectively force developers to unload their unsold residential units on such short notice. We expect that Henderson Land (00012 HK) will be the most affected company among our coverage, although we see the impact to be minimal. We maintain a "Neutral" investment rating for the Hong Kong property sector given our expectations that the prime rate will be raised in 2H18. The historical low rental yields in Hong Kong and the speeding up of rate hike cycles in the US maybe an indication of the end of the housing boom. Rating: Neutral Maintained 评级 : 中性 ( 维持 ) 1-Year Performance of the Hong Kong 香港房地产行业过去 1 年的股价表现 % Jul- Oct- Jan- Apr- Jul HSI Index Sino Land Source: Bloomberg, Guotai Junan International. Henderson Land Hang Lung Properties 房地产行业这六项措施基本上不会创造新的住房供应我们注意到政府的目标是以私人房屋为代价提高公共房屋供应, 例如重新分配启德及安达臣道石矿场的 9 个私人房屋用作公共房屋发展位于马头围道的新港人首置计划项目本来被视为私人住宅供应, 但规模太小, 无法解决香港的房屋问题居屋折扣率上升无法填补居屋的供应缺口现在加快出售已完成项目的未售一手私人住宅单位意味着未来几年的可出售房屋将减少政府旨在通过引入新的空置税迫使其加快销售现时未售的一手私人住宅单位然而, 鉴于住房供应缺乏弹性, 未来 3 至 4 年的住宅单位供应总量相对固定换言之, 如果房地产开发商因空置税而急于出售 9,000 个单位, 那么未来几年内可供出售的单位将会减少另外, 房地产开发商可以规避新的空置税开发商可以透过放慢正在开发项目的施工进度, 或简单地以短期租约形式租出单位, 以避免空置因此, 我们预计政府的新举措不会有效地迫使开发商在短时间内卖出所有未售出的住宅单位我们预计恒基地产 (00012 HK) 将成为我们覆盖范围内受影响最大的公司, 尽管我们认为影响微乎其微我们维持对香港房地产行业的中性投资评级, 因为我们预计最优惠利率将于年下半年被上调香港历史新低的租金收益率以及美国加息周期的加速可能显示房地产繁荣快将结束 Company Name Code Price Rating 18 Underlying 19 Underlying 20 Underlying 公司名称编号股价投资评级核心市盈率核心市盈率核心市盈率 18Underlying ROE 18 PBR 18 Yield 核心净资产收益率市净率股息率 (HK$) (x) (x) (x) (x) (%) (%) Henderson Land Neutral Sino Land Accumulate Hang Lung Property Accumulate Weighted Average 市值加权平均 Neutral Source: the Companies, Bloomberg, Guotai Junan International. See the last page for disclaimer Page 1 of 5

2 房地产行业 Housing price boom continued in. According to the Rating and Valuation Department of Hong Kong, housing prices extended its uptrend with 8.5% cumulative increase in the first 5 months of. The composite index of secondary-market housing prices climbed to in May, which was a historical high level in the territory. The housing price fever has become one of the most pressing social problems that the government vowed to deal with. Figure-1: Hong Kong Price and Rental Indices of Residential Properties Figure-2: Rental Yield among Different types of Residential Properties in Hong Kong 450 7% % 5% 4% 200 3% % 1% 0 0% Composite Price Index Composite Rental Index A B C D E Source: Hong Kong Rating and Valuation Department. Source: Hong Kong Rating and Valuation Department. Note: Grade A refers to units with an area less than 40 m 2. Grade B refers to units with an area between 40 m 2 to 69.9 m 2. Grade C refers to units with an area between 70 m 2 to 99.9 m 2. Grade D refers to units with an area between 100 m 2 to m 2. Grade E refers to units with an area above 160 m 2. Figure-3: Hong Kong Mortgage Payment-to-Income Ratio Figure-4: Centa-City Leading Index (CCL) 60% % % % % 80 10% % 20-10% 0 Prime Rate Base HIBOR Base Source: Centaline Property Agency Limited. Source: Centaline Property Agency Limited. The Chief Executive of Hong Kong, Mrs. Carries Lam, announced a package of 6 new initiatives on the domestic housing market on 29 June. The details of the initiatives are as follows: Table-1: Details of the 6 New Initiatives Initiative Details Effect 1. Property developers will speed Special Rates on vacant first-hand private residential units (Vacancy tax) The new vacancy tax will be levied at 200% of the rateable value of the vacant first-hand private residential units concerned, which is equivalent to about 5% of housing prices according to the government. The government will treat any first-hand private residential units with the Occupation Permit issued for 12 months or more and having not been occupied or rented out for more than 6 months as "vacant". up their sales process. 2. Vacant residential units maybe rented out to avoid tax. 3. Land cost is expected to fall in government land auctions since the new tax acts as a new restriction on land use. See the last page for disclaimer Page 2 of 5

3 房地产行业 Improve developers sales practices The government will amend the Lands Department Consent Scheme to require developers to offer for sale no less than 20% of the total number of residential units subject to the relevant pre-sale consent at each turn of sale, regardless of the sales method (including tender and auction). Developers will struggle to influence market sentiment by intentionally controlling the number of flats for sale to create illusion of oversubscription. Raise price discounts under the Home Ownership Scheme (HOS) The affordability test of the HOS will take the median monthly household income of non-owner occupier households (currently around HKD39,500, net of MPF contributions) as the reference point instead of the income limit of the white form family applicants (currently $57,000, net of MPF contributions) New subsidized homes sold under HOS will be priced at 52% of the market value under the latest affordability test assessment, down from 70% before the change. The Ma Tau Wai Road project under the Urban renewal Authority will New Starter Homes project provide 450 Starter Homes units for pre-sale in December. The discount for the Starter Homes units will be 10%-20% less than discount used for the preceding HOS sale exercise. The Hong Kong Mortgage Corporation Limited will provide mortgage insurance cover such that buyers can obtain mortgages of up to a 90% The Ma Tau Road project will become the first Starter Homes for sale instead of the Anderson Road project announced in the -19 Policy Address. LTV from banks. Reallocation of private 9 private housing sites in Kai Tak and Anderson Road Quarry will be used The reallocation will increase housing sites for for public housing. The 9 sites contain 10,600 residential units that were public housing supply at the public housing assigned for private housing. expense of private homes. 1.Only 153 units of community Set up a task force to increase the supply of transitional housing The task force will focus on encouraging non-government institutions to provide transitional housing. housing has been launched units of pre-fabricated modular housing will be available in Nam Cheong Street. The 6 initiatives will basically create no new housing supply. We note that the government has targeted to raise public housing supply at the expense of private housing, such as reallocating the 9 private housing sites in Kai Tak and Anderson Road Quarry for public housing development. The new Start Homes project in Ma Tau Wai Road, which was considered to be sold as private homes, is too small in size to resolve the housing problems in Hong Kong. The last round of HOS in April received more than 160,000 applications, which is equivalent to 36x oversubscription even at a 30% discount from market value. The increase in concession will only be enjoyed by the lucky ones who are fortune enough to win this lottery, but it won t fill up the supply gap in the Home Ownership Scheme (HOS). Speeding up the sale of the 9,000 unsold first-hand private residential units in completed projects now means less for sale in the next few years. According to the Transport and Housing Bureau, there will be approximately 96,000 residential units for sale in the coming 3 to 4 years. Among the 96,000 units of the potential private housing supply, 9,000 units were unsold residential units in completed projects held by property developers, which the government aimed to push for sale as soon as possible by introducing the new vacancy tax. However, given the inelastic nature of housing supply (as it takes 4 to 5 years for residential projects to complete the construction phase), the total supply of residential units in the coming 3 to 4 years should be relatively fixed. In other words, if property developers rush to sell the 9,000 units due to the vacancy tax, there will be fewer units available for sale in the next few years. Property developers may get around the new vacancy tax easily. Since the government defines "vacancy" as the issuance of Occupation Permit, developers may slow down the construction schedule for projects under development to leave more time for marketing. For the completed residential units, developers can simple rent out the unsold units under short lease to avoid being vacant. Therefore, we do not expect the government s new move to effectively forcing developers to unload all their unsold residential units on such short notice. Henderson Land (00012 HK) will be the most affected company among our coverage, although we see the impact to be minimal. Henderson Land has the largest residential development business among our coverage. According to our estimate, Henderson Land should be holding less than 100 completed residential units for sale, which is a very low level. We do not expect Henderson Land to be hurt by the proposed vacancy tax at the moment. However, the value of the 2 land sites acquired from HKICIM Group (00687 HK) in February maybe be adversely affected as the government re-assigned 3 land plots in Kai Tak for public housing. See the last page for disclaimer Page 3 of 5

4 房地产行业 All in all, we expect that the new initiatives should impose more of an emotional impact on the housing market rather than effectively stopping the housing market boom. We maintain a "Neutral" investment rating for the Hong Kong property sector given our expectations that the prime rate will be raised in 2H18. The historical low rental yields in Hong Kong and the speeding up of rate hike cycles in the US may be an indication of the end of the housing boom. See the last page for disclaimer Page 4 of 5

5 房地产行业 [Table_CompanyRatingDefinition] Company Rating Definition The Benchmark: Time Horizon: 6 to 18 months Rating Hong Kong Hang Seng Index Definition Buy 买入 Relative Performance>15%; or the fundamental outlook of the company or sector is favorable. Accumulate 收集 Relative Performance is 5% to 15%; or the fundamental outlook of the company or sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the company or sector is neutral. Reduce 减持 Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable. Sell 卖出 Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable. [Table_IndustryRatingDefinition] Sector Rating Definition The Benchmark: Time Horizon: 6 to 18 months Rating Hong Kong Hang Seng Index Definition Outperform 跑赢大市 Relative Performance>5%; or the fundamental outlook of the sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral. Underperform 跑输大市 Relative Performance<-5%; Or the fundamental outlook of the sector is unfavorable. [Table_DISCLOSUREOFINTERESTS] DISCLOSURE OF INTERESTS (1) Except for SHENZHEN INTERNATIONAL (00152 HK), the Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report. (3) Except for KAISA GROUP (01638 HK),GUOTAI JUNAN I (01788 HK),BINHAI INVESTMENT (02886 HK),GFI MSCI A I (03156 HK),CAM SCSMALLCAP (03157 HK),ZHENRO PPT (06158 HK),MR CSI300 ETF-R (CNY) (83127 HK),GFI MSCI A I-R (CNY) (83156 HK),Guotai Junan and its group companies do not hold equal to or more than 1% of the market capitalization of the issuer mentioned in this Research Report. (4) Guotai Junan and its group companies have not had investment banking relationships with the issuer mentioned in this Research Report within the preceding 12 months. (5) Guotai Junan and its group companies are not making a market in the securities in respect of the issuer mentioned in this Research Report. (6) Guotai Junan and its group companies have not employed an individual serving as an officer of the issuer mentioned in this Research Report. There is no officer of the issuer mentioned in this Research Report associated with Guotai Junan and its group companies. DISCLAIMER This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities (Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in research reports, including investment banking, investment services, etc. (for example, the placing agent, lead manager, sponsor, underwriter or invest proprietarily). Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan. Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision. This Research Report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Guotai Junan and its group companies to any registration or licensing requirement within such jurisdiction. Guotai Junan Securities (Hong Kong) Limited. All Rights Reserved. 27/F., Low Block, Grand Millennium Plaza, 181 Queen s Road Central, Hong Kong. Tel.: (852) Fax: (852) Website: See the last page for disclaimer Page 5 of 5

深圳甲级写字楼市场. RESEARCH & FORECAST REPORT Shenzhen Grade A Office Market Q THE KNOWLEDGE MARKET OVERVIEW 市场概览

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