Building boom begins in Hong Kong

Hong Kong braces for a housing boom in the next six years fueled by developers awash in cash from the prolonged low-interest regime.

“We have a combination of a red-hot market and a government trying to make more units available to buyers quicker,” said Wong Leung-sing, an associate director of research at Centaline Property Agency Ltd., Hong Kong’s biggest property firm. “Of course, developers are rushing in.”

Property companies have become the best performing sub-group in the benchmark Hang Seng Index this year. Analysts estimate they might have sold as many as 7,000 homes in third quarter, bringing the year’s total to more than 15,000 units for sales of US$19 billion. That compares with about 9,100 units for US$14 billion in 2011.

Real estate companies led by New World Development Company, the best performer in the Hang Seng Property Index (HSPI), could sell more than 3,300 units from eight new projects in October. New World accounted for some 7% of the new homes sold in Hong Kong over the past year.

More than 2,500 units from The Reach, a joint project by New World and Henderson Land Development Co., may go on sale this month. Cheung Kong Holdings Ltd. might sell more than 300 units from two new projects.

Other builders with new developments going on sale include Sino Land Co., Wheelock & Co Ltd. and China Overseas Land & Investment Ltd.

The HSPI, which tracks nine of the biggest developers in Hong Kong including Cheung Kong and New World, has risen 29% this year, compared with the 13% rise in the Hang Seng Index.