Financial News
Written by: Zhang Weilun
2020-09-11 15:40
Last update date: 2020-09-11 15:40
Hang Lung Properties (0101) won the dormitory property of the US Consulate on Shouson Hill Road for less than 2.6 billion yuan, which is the first residential land in Hong Kong in the past 20 years.
The project will be rebuilt, and the total investment is expected to be about 4 billion yuan.
Morgan Stanley expects that the project's profit before tax, interest, depreciation and amortization (EBITDA) rate will reach 40%.
Morgan Stanley pointed out that Hang Lung acquired this project at an average price of about 54,000 yuan per square foot this time, which was lower than the price of 86,000 yuan per square foot obtained by China Resources Land (1109) in the same district in 2018, and the bid was also lower than market expectations.
Taking construction costs into account, it is expected to be completed in 2024. If the price is 100,000 yuan per square foot, the project's EBITDA rate will reach 40%.
The bank also pointed out that Hang Lung has similar projects on Blue Pool Road and believes that the company can recover from its luxury retail sales in the Mainland and maintains an "overweight" rating.
Another major firm, JP Morgan Chase, pointed out that the Shouson Hill Road project is slightly positive for Hang Lung, but the price is lower than market expectations, reflecting the conservative view of local developers on the super luxury housing market.
The bank pointed out that based on the comparable price per square foot of neighboring projects, the project is expected to have a satisfactory profit margin.
Hang Lung: Purchase of land casts a vote for confidence in Hong Kong's prospects
Hang Lung obtained the land at a super-bamboo price and expressed its great pleasure to successfully bid for the Shouson Hill land.
This noble land is rare in the market and the price is reasonable.
The purchase of the land is a vote of the company's confidence in Hong Kong's prospects.
Market participants believe that the price is higher than expected or related to more political sensitivity.
Zhang Qiaochu, Managing Director of Hongliang Consulting and Appraisal, said that the property at No. 37 Shoushan Village Road, which changed hands this time, has a better view than the neighboring land No. 39 and has fewer restrictions on redevelopment. However, the transaction price this time is over 3% lower. This reflects a considerable discount.
He believes that the low price transaction is mainly due to politically sensitive issues, which has caused many potential buyers to "retire" and withdraw from the competition. The situation has also enabled new buyers to seize land at a "bamboo price". It is estimated that after the market conditions recover in the next few years, the project Jianxing’s bungalows can be sold for 100,000 yuan per square foot, while strata apartments can be sold for about 80,000 yuan. It is expected that they can enjoy a good return.
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