[ET Net News Agency, 5 February 2018] The credit profiles of Hong Kong's property
companies will hold up in the next one to two years, despite a likely slower growth in
residential property prices, according to a report, titled "Hong Kong Property Developers
Should Regain Strong Footing Despite Market Uncertainty," that S&P Global Ratings
published today.
"The decreasing participation of Chinese competitors in Hong Kong land tenders and more
farmland conversion, together with recovering retail demand and solid office rentals,
should support the credit profiles of Hong Kong's property developers," said S&P Global
Ratings credit analyst Esther Liu.
"We believe the sector has adequate financial buffers to absorb an increase in financial
leverage owing to higher land purchases." she added.
The credit rating agency thinks concerns of Hong Kong developers losing market share to
their Chinese peers are fading because the Chinese companies have slowed their penetration
into Hong Kong.
The share of Chinese developers in land tenders has fallen to 11% in fiscal 2017 (ending
March 31), from nearly 50% in fiscals 2015 and 2016. S&P attributed this decline to the
Chinese government's tight capital controls and scrutiny on overseas property investment.
Moreover, the slower project cycles in Hong Kong than the Chinese developers expected
added execution risks. Swift sales, climbing property prices, a strong project pipeline,
and subdued acquisitions have strengthened the balance sheets of Hong Kong property
developers. The agency believes these companies now have more capacity to acquire land and
enhance market share. (KL)