Property Stocks Weaken in Hong Kong Amid Coronavirus Concerns
Property Stocks Weaken in Hong Kong Amid Coronavirus Concerns
(Bloomberg) -- Property stocks in Hong Kong declined Wednesday as investors expressed their worry about the deadly coronavirus’s impact on the sector.
An index tracking developers in the city slipped as much as 3.6%, the steepest intra-day fall since November. Among the biggest laggards were Hang Lung Properties Ltd. and Kerry Properties Ltd., both down more than 5%.
Another benchmark tracking Chinese property firms listed in Hong Kong dropped as much as 3.9%. The Hang Seng Index was down 2.4% in mid-afternoon trade. Markets in the former British colony opened today after the Lunar New Year holiday.
“The concerns about the uncertainties in new home sales and luxury retail leasing will continue until we don’t see any material coronavirus outbreak over the next two weeks,” said Patrick Wong, a real estate analyst with Bloomberg Intelligence.
The novel coronavirus originated in the Chinese city of Wuhan and has spread to a number of other countries. Confirmed cases in China have overtaken the official number of infections in the country during the SARS epidemic. Hong Kong Chief Executive Carrie Lam said Tuesday that China will stop individual travelers to Hong Kong to curb the virus.
Would-be home buyers in Hong Kong are already heading for the sidelines, early data show. Sales transaction volumes for 10 large housing estates tracked by Centaline Property Agency Ltd. tumbled on average 75% last weekend versus the weekend prior.
Wait and See
“Lunar New Year has traditionally been a low season for the property market. Together with the deteriorating coronavirus situation, many buyers have paused visiting apartments,” said Louis Chan, the chief executive officer of Centaline’s residential division.
Some are pulling the plug entirely.
Last week, when the first case of coronavirus case was confirmed in the city, “we originally arranged to sign a contract but the buyer canceled the appointment,” Chris Wong, an executive director at Century 21 Sunrise Property Agency Ltd., said on Thursday. “Because of the news, he decided to wait and see.”
Developers are taking precautionary measures at their sales centers in an effort to ease buyer concern.
Wheelock Properties Ltd. said that anyone who had been to Hubei province, where Wuhan is located, in the previous 14 days would not be allowed to enter its showrooms. Sun Hung Kai Properties Ltd., whose shares were down 2.9% Wednesday, said it would strengthen sanitation and urge visitors to wear face masks.
However, real estate companies are in a better financial position now than they were during the SARS outbreak 17 years ago.
“Developers have strong balance sheets now, unlike in 2003 when they had been through rough years before the outbreak,” Bloomberg Intelligence’s Wong said. A 2013 change to stamp duties that made buying residential properties for investment purposes more expensive will also discourage fire sales, he added.
To contact the reporter on this story: Shawna Kwan in Hong Kong at wkwan35@bloomberg.net
To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Peter Vercoe
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