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Hong Kong tycoon calls bottom of China property slump

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Adrian Cheng, a Hong Kong real estate tycoon, has called the bottom of the mainland China property market crash and his New World Development Group plans to spend 10 billion yuan ($1.46 billion) on land within the next year. He said he plans to invest.

Cheng, chief executive of Hong Kong-listed New World Development and heir to a Chow Tai Fook family fortune, said China’s property prices could fall further amid a liquidity crisis and economic slowdown. More optimistic than many analysts.

“We’re at the bottom now and it’s going to recover slowly. Chen said in an interview with the Financial Times that he’s very optimistic that it will recover very well over the next year or two.” It’s a good time to start earning war funds.”

Cheng said his group will invest 10 billion yuan in land in China’s top cities such as Shanghai, Guangzhou, Hangzhou and Shenzhen over 12 months.

New World recently purchased both industrial and greenfield sites in China for development.

This group includes luxury mall brand K11, which Mr. Chen used to target the elite market by combining luxury retailers, restaurants and art installations. His 228,500-square-meter K11 Ecoast mega-retail development is set to open in his 2024 in Shenzhen, his 18 million city across the border from Hong Kong, a hub for tech companies such as Tencent. is.

Cheng said New World’s group companies’ sound gearing ratios and capital, as well as their mainland experience, have given them an edge in China’s auction market.

“This crisis is an opportunity because we have… a lot of local developers are so financially strained that there is no longer a lot of competition and they are suffering a lot. he said.

China cuts mortgage rates Last week was the second in a year as the People’s Bank of China attempted to limit damage from liquidity problems hitting the real estate sector.

A crisis that started with developers Evergrandehas swept across the industry, resulting in a wave of defaults and companies unable to complete apartments partially paid for by buyers.

“It’s very difficult to say ‘yes, this is the bottom’ . . . there are no signs of a strong recovery,” said Gavekal Dragonomics real estate market analyst Rosealea Yao, citing the retail real estate outlook specifically. said. “The big backdrop is that people are moving from offline retail to online retail. Even in the most popular locations, the demand for retail space is not as strong,” he said. increase.

Stephanie Lau, senior credit officer at Moody’s, said Hong Kong developers are generally conservative and will likely seek lucrative sites in prime cities. “Even if it looks like that, there is a chance to trade cheaply… I think it’s the best. [developers] We are very careful,” says Lau.

Hong Kong developers are also suffering from economic turmoil caused by pandemic border controls between Chinese territory and the mainland.

Cheng said the move of tenants to his new 11 Skies office and retail project in Hong Kong, which is intended to serve areas around the territory the Chinese government is touting as the “Greater Bay Area,” will be delayed. said deaf.

New World shares closed at HK$25.95 on Friday, down more than 14% since the beginning of the year. This decline is largely in line with the overall decline in the Hang Seng Property Index.

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