29/6/2018-2

Citi: The vacant tax rate is difficult to determine. The property market is still optimistic.

The government’s research on vacant taxes is nearing completion, and the market is expected to be the fastest or announced in the week. Star real estate analyst Cai Jinqiang believes that the vacant tax rate is difficult to determine to the appropriate level. I believe that the government’s purpose of introducing vacant tax is to relieve public grievances, but the impact on the property market is limited.

Should accelerate the conversion of brownfield agricultural land

Cai Jinqiang, Asia’s best real estate analyst who won the “Institutional Investor" for nine consecutive years, is the head of research and chief China strategist of Citi Regional in Asia Pacific. He also led Citi for the best real estate analysis team in Asia for nine consecutive years. In an exclusive interview, he said that Hong Kong’s new market was booming and the secondary market was gradually shrinking. Therefore, developers did not worry about vacant taxes at all and were optimistic about the property market throughout the year.

“The vacancy tax is estimated to be a gesture policy. The purpose is to relieve the public grievances. The tax rate is too high for the developers to be unfair, and the effect is too low. Therefore, it is expected that the measures will not affect the property market."

To alleviate the hot atmosphere of the property market, Cai Jinqiang believes that we should start with increasing supply. “The government should speed up the conversion of brownfields and the conversion of agricultural land. After three or four years, a large number of low- and medium-end residential properties will be launched, which will effectively solve the housing problems of young people."

He said that only by consistently accelerating land conversion and forcing the conversion of land use is the only way to effectively solve the problem of getting on the train. For example, Xindi (00016) completed two projects in Tuen Mun Siu Hong Area 54 and Sai Kung 14 Township last year. For the premium, Henderson Land (00012) has also completed the fare agreement for the Kwu Tung North and Fanling Ma Po Po projects. It can also be used as a starting point for some small country parks and consider how to make good use of the North Lantau land.

Add P 3 to 4 times to build pressure

Property prices have risen by more than 15% this year. Cai Jinqiang said that property prices have risen very quickly. Part of the reason is related to the integration of China-Hong Kong financial market and the creation of a large number of rich people. They are not living in Hong Kong, they are buying property in Hong Kong, and the result is pushing up property prices in Hong Kong. At present, the property market is still not at a very dangerous level. With tight supply, property prices will inevitably rise in the event that supply exceeds demand. He admits that the market should no longer discuss the issue of “flour (land price) expensive bread (property price)" because everyone is now “cake", not “bread."

Recently, the Hong Kong dollar interest rate has risen sharply, and the one-month interest rate has even risen by 2%, which has caused the market to expect a higher price (Prime rate).

Cai Jinqiang believes that “everyone has psychological expectations for interest rate hikes, and most developers have high holding capacity and market demand is quite strong, especially in the luxury residential market." Therefore, the increase in P will not affect the property market this year. It will only fall by 2% to 3%. Because there are many people in the market who are already very profitable, they will not easily sell the property, which will lead to distortion of the property market. I believe that it will be necessary to add more P before it will put pressure on the property market, such as this year. Add 3 to 4 times and 3 to 4 times next year.

Real estate stocks fall behind because of North Water’s lack of interest

Property prices have continued to rise year after year. Property stocks in Hong Kong have performed sluggishly and have been fragmented with the property market. Cai Jinqiang explained that this is mainly due to the fact that mainland funds are not interested in property stocks in Hong Kong. Property stocks are characterized by stable return but low growth, which is not in line with Mainland investors are pursuing high growth and high returns. In the absence of funds, the stock price is naturally difficult to achieve breakthrough performance.