Two mainland property developers are selling their shares in
Hong Kong, despite the central government's policies to check
overheating in the sector.
China Properties Group Ltd (CPG), controlled by Hong Kong tycoon
Wong Sai-chung, and Shenzhen-based developer Hong Long Group are
expected to float HK$2.5 billion through initial public
offerings.
CPG will offer 450 million shares in an attempt to raise up to
HK$2 billion. The public float represents 25 percent of the
company's enlarged issued share capital.
Ten percent of the shares will be allocated to individual
investors. The indicative range is set between HK$3.5 and HK$4.7
apiece.
The company is currently developing large projects in
Shanghai.
Shenzhen developer Hong Long plans to raise as much as HK$515
million by selling 250 million shares. The range is set between
HK$1.43 and HK$2.06.
Hong Long is mainly involved in residential and commercial
projects in Shenzhen, with about 1.5 million square meters of land
reserves. Its prospectus said the company would reap 210 million
yuan in 2006, increasing 146 percent from the previous year.
Both companies are scheduled to begin trading shares on February
23.
But some analysts said the mainland's ongoing macroeconomic
controls might hamper investor demand for property issuers.
To prevent its property market from overheating and slow down
rising housing prices in some areas, the central government has
announced a land appreciation tax that would eat into developers'
profit.
It also imposed new rules on property agencies and foreigners
who want to buy more than one house.
Moreover, Shanghai and Shenzhen, the two companies' bases, will
see a slowdown in their real estate markets in the coming years,
said Liao Qun, chief economist with Hong Kong's CITIC Ka Wah
Bank.
The mainland needs to step up the implementation of its measures
to cope with the overheating property market.
"It may take another four years for the market to cool down," he
said.
Over the next four years, Liao predicted the annual growth of
Shanghai property prices could slow to 3 percent. Big cities like
Beijing and Shenzhen will also see prices rise in single digits by
then, he said.
(China Daily February 13, 2007)