Billionaire Li Ka-shing’s (李嘉誠) Cheung Kong Property Holdings Ltd (CK Property, 長地集團) said the real-estate market in Hong Kong remained challenging as sales in the city plunged to the lowest in 25 years last month.
“The property market conditions remained challenging in Hong Kong and on the mainland during last year,” the firm said in a statement on Thursday announcing an underlying profit of HK$15.6 billion (US$2 billion) for its first full year as a publicly traded entity. “All development and marketing plans have proceeded cautiously according to their scheduled timetable.”
CK Property’s first full-year earnings after Li spun off real-estate assets from his conglomerate in June last year come as the property market in Hong Kong is slowing, with prices dropping 11 percent since they peaked in September last year and sales plunging to a 25-year low last month.
In China, where the developer is also active, prices fell for most of last year amid uncertainty over the economy and a glut of homes.
CK Property said property prices in Hong Kong and China would continue to be affected by increases in construction costs as wells as development and marketing expenses.
The market, especially in Hong Kong, is also seeing increasing competition in land auctions from new entrants, the company said.
“It is therefore not an easy task to acquire land at reasonable costs,” CK Property said.
CK Property reported profit attributable to shareholders of HK$17.1 billion on revenue of HK$58.8 billion, according to its statement on Thursday.
The firm derived 60 percent of its full-year sales from China, recording sales of HK$29.4 billion. Home prices in China, especially in some of the smaller cities, slumped last year on a slowing economy.
Prices started to recover in the second half of last year in major cities amid easing monetary policy and loosened property curbs.
CK Property indicated that it might seek to expand beyond the real-estate business, without giving details.
The company “is open to considering various opportunities to generate revenue from other sources,” it said.
Li’s flagship CK Hutchison Holdings Ltd (長和集團) on Thursday posted a net profit of HK$31.2 billion for last year, down 8 percent from the previous year.
However, the figure beat the HK$30.9 billion average analysts’ estimate from Bloomberg after a sweeping reshuffle of Li’s business empire.
The firm, which controls assets in telecoms, utilities, ports and other industries in more than 50 nations, said “significant headwinds” had affected its performance, with low oil prices particularly hitting its energy business.
Li said in a news briefing on Thursday that the business environment in the city was at its worst for 20 years, with property and retail “doing worse than during SARS,” referring to the disease outbreak in 2003.
Additional reporting by AFP
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