Property stocks weaken in Hong Kong amid virus concerns

Hong Kong

PROPERTY stocks in Hong Kong declined on Wednesday, as investors expressed worry about the deadly impact of the coronavirus on the sector.

An index tracking developers in the city slipped as much as 3.6 per cent, the steepest intra-day fall since last November.

Among the biggest laggards were Hang Lung Properties and Kerry Properties, both down more than 5 per cent.

Another benchmark tracking Chinese property firms listed in Hong Kong dropped as much as 3.9 per cent.

Markets in the former British colony opened on Wednesday morning after the Chinese New Year holiday.

Patrick Wong, a real estate analyst with Bloomberg Intelligence, said: "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."

The novel coronavirus originated in the Chinese city of Wuhan and has spread to other countries.

Confirmed cases in China have overtaken the official number of infections in the country during the Sars epidemic.

Hong Kong's chief executive Carrie Lam said on Tuesday that China will stop individual travellers going to Hong Kong to curb the virus.

Would-be home buyers in Hong Kong are already heading for the sidelines, early data showed. Sales transaction volumes for 10 large housing estates tracked by Centaline Property Agency tumbled on average 75 per cent last weekend, compared to the previous weekend.

"The Chinese 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. Chris Wong, an executive director at Century 21 Sunrise Property Agency, said that when the first case of coronavirus case was confirmed in the city last week, he had arranged to sign a contract, but the buyer cancelled the appointment. "Because of the news, he decided to wait and see."

Developers are taking precautionary measures at their sales centres in an effort to ease buyer concern.

Wheelock Properties 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, whose shares were down 2.9 per cent on Wednesday, said it would beef up 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.

Bloomberg Intelligence's Mr Wong said: "Developers have strong balance sheets now, unlike in 2003, when they had been through rough years before the outbreak."

A 2013 change to stamp duties that made buying residential properties for investment purposes more expensive will also discourage fire sales, he added. BLOOMBERG

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