Hong Kong Property Sector: Hard or soft landing in 2012?

- Traces of 96/97 bubble? Home prices up 14% YTD and 47% from 2008 trough. Increasing call for some kind of housing subsidy?
- Public consultation already underway. Two key dates: Sep 17 and Oct 13
- Theory Vs. politics?
• The Hong Kong government theoretically favours a free market
• Subsidy will short circuit the market’s natural restraint
- Is it a bubble? Health check OK
• No excessive use of leverage
• Speculative demand in check
- Three new sources of demand
• Demolition displacement
• Return of mainland babies
• Negative real rates
- Valuations are still very supportive
- Landbank duration important in case of a hard landing?
• SHKP, Cheung Kong and HK Land are our top picks

Nomura HK Property Sector August 2010

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