Future is bright for HK property developers: Shih

The founder of Centaline Property, Shih Wing-ching, said he believes the local stock market has overreacted to reports that mainland officials had ordered local developers to use their resources to support Beijing’s interests and solve Hong Kong’s housing crisis.

Major developers saw their share prices plummet following the Reuters report.

But speaking to RTHK on Wednesday, Shih said he doesn’t think that the central government is extending its clampdown or piling pressure on local property giants, whose future is actually very bright.

“I think the developers in Hong Kong still have a lot of role to play in future, unlike their counterparts in China. The Chinese developers, I think, have less function to play in future because they have already built a lot of properties,” he said.

“The property in China is oversupplied, but not in Hong Kong. We need to build more, but who’s going to build? [Private sector flats] have to be built by the private developers.”

The Centaline founder added that he expects local home prices to slowly drop over the next few years as supply grows.

“The property price will surely go down. It will not go down immediately; it will go down step by step, gradually. And in the meantime, the supply will increase,” he said.

Going forward, Shih said the government is also likely to suffer from a drop in land revenue.

“In the early stage, it is the government who will suffer because the land price will drop, not the profit of the developers. The government cannot rely on the revenue from the property sector too much in the future.”