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Further downside seen in mainland property

(Agencies)
Updated: 2009-03-17 15:48

Chinese mainland's property market faces further downside risk, while Hong Kong's residential property market is likely to stabilize, real estate developer New World Development Co Ltd said on Tuesday.

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"In the short-term, the uncertainty of the global economic situation may induce further downside risks to the mainland property market," managing director Henry Cheng said in a statement.

"Strong affordability, low interest rates and tight supply in the pipeline should benefit the Hong Kong property market."

Cheng said the Hong Kong residential market had shown signs of stabilization in recent months after prices of newly launched projects fell and mortgage availability improved.

The company said it would launch sales of four residential projects with over 1,200 units in the next 12 months.

New World Development reported a loss of HK$992.2 million ($127.2 million) for six months to December 2008, against HK$5.65 billion profit in a year ago period, as the recessionary climate in the territory hit the sentiment of the real estate market.

The loss was due mainly to revaluation loss in investment properties of about HK$2.35 billion and an impairment provision on available-for-sale financial assets of about HK$330 million.

Gross rental income in Hong Kong rose 7.2 percent year-on-year to HK$625 million.

"Following the rapid slides of the international financial markets in fourth quarter of 2008, the market expects pressure on the rental rates in both the office and shopping malls due to the lower demand of office space and lower retail consumption," Cheng said.

Mainland property arm New World China Land posted a 59.3 percent drop in interim profit to HK$374.2 million, and infrastructure and service arm NWS Holdings saw 63.6 percent drop in first half net to HK$813.3 million.