上月老闆王文彥先生獲德意志銀行邀請出席一個午宴暨座談會擔任主講嘉賓，談談對近期樓市轉淡、市場轉勢在即的各種看法及對來年後市的預測。下文為德意志銀行為座談會所撰寫的總結文章節錄：
Key takeaways from luncheon with Mr. Denny Wong
Deutsche Bank Markets Research
Tony Tsang (Research Analyst) Jason Ching, CFA (Research Analyst)
Turning point has emerged: end of the 2003 uptrend in HK property prices
We hosted a luncheon with Mr. Denny Wong, co-founder of Centaline, and received good feedback. Overall, Mr. Wong is seeing an end to the uptrend in HK residential prices that started in Aug 2003. The positive pillars that supported rising property prices have faded, and there are now an increasing number of negative factors affecting the HK property market. The market is entering a downturn, and Mr. Wong expects property price drops of at least 40% from current levels. As a professional property investor, Mr. Wong believes that now is a good time to sell property. As a property cycle normally lasts for at least 10 years, a good time to buy is still likely quite a few years off.
Turning point in the HK residential market has already emerged in Sep 2015
Starting Sep 2015, Mr. Wong has seen a turning point in the HK residential market. In the secondary market, there have been sharp declines in transaction volumes. At the same time, more owners in the secondary market have started to lower both asking prices and/or asking rents, and more sales and rental transactions are being done at 3-11% discounts to prevailing market prices and rents. In addition, in the primary market, since Sep 2015, there have been about 30 cases in which the buyer has let go of their deposit and walked away from their purchase. These are all signs of a weaker residential market.
New residential supply is rising at a time when demand is weakening
According to the HK government, the potential new supply is about 83,000 units for the next 3-4 years, c.28% higher than the 2012 level. That means at least 20,000 units of new supply per year, 70% higher than the average level per year in the past 10 years. In the past three years (2012-14), the number of new starts was 58% higher than the annual average in 2007-11. Mr. Wong is confident that the HK government, currently led by Mr. CY Leung, can achieve and likely exceed the new supply targets. Conversely, housing demand is weakening given the weak economic outlook in HK, China and the world.
Low gross rental yields and high P/Es for Hong Kong properties
According to Mr. Wong, for small-medium units, gross rental yields are now 3-3.3% for HK Island and Kowloon, and 3.4-3.8% for New Territories. For luxury apartments, gross rental yields are now 1.5-2.5%, while for super-luxury apartments, gross rental yields are now less than 1%. These yields also imply P/Es of 26-33x for small-medium apartments, 40-67x for luxury apartments, and c.100x for super-luxury housing. According to Mr. Wong, given the lack of future rental or capital value appreciations for HK properties now, these P/Es are way too high for normal and professional investors. Mr. Wong believes that 5-7% gross rental yields and 15-20x PE for small-medium apartments are more reasonable, implying property price corrections of 50% from current levels.
For HK properties, we prefer names with strong defensive qualities
Our top picks are CK Prop (for lower land costs and strategy of selling instead of adding HK assets in recent years), Sino Land (for high net cash position and high dividend yields supported by recurrent income), MTRC and Hang Lung Prop (for defensive portfolios). We also like NWD for attractive valuations and improving management track record. We remain concerned on the outlook for HK retail and hotel markets, and retain Sell on Hysan, Great Eagle. Our TPs are based on NAV discounts. Key risks: unexpected economic, political volatility.
To be continued…
