HONG KONG (Nikkei Markets) -- Sun Hung Kai Properties on Thursday said it is willing to allow the use of some of its land for public rental housing to ease mass protests that have rocked Hong Kong for months as the city's largest developer flagged uncertainty over its results in the years ahead.
The company, owner of one of the biggest land banks in a city known for exorbitant property prices and minimal living spaces, signaled that a better housing ladder could help to ease unrest among young people, and that the demonstrations were a "wake up call" to speed up housing and land supply in the former British colony. It promised to contribute to addressing the city's housing problem by developing more homes, and making additional efforts to expedite the conversion of its agricultural land to residential development projects.
"Some people are talking about land resumption so the government can build public rental housing. We have to accept it," Chairman Raymond Kwok told reporters at a news conference. While the company was open to allowing some of its land to be used for building public rental housing, it would "oppose the idea if the government takes back the land and re-sells it in the private market."
The "most serious shortage" of housing is with public rental accommodation, Kwok added.
Local developers including SHK Properties have been among the most-affected parties since mass demonstrations began in Hong Kong in June, weighing down property transactions and commercial rents as retail sales and inbound tourist numbers were impacted amid the unrest. While housing affordability isn't among the protesters' demands, media reports have listed high property prices in the city as a key grievance among residents.
The demonstrations, which were initially directed against a controversial extradition bill by the government - the bill has since been withdrawn - have morphed into a wider movement, with the protesters now demanding universal suffrage, among other things.
SHK's land bank amounted to about 58 million square feet at the end of June, including 25.1 million square feet of properties under development. In addition, the group also owned about 31 million square feet of agricultural land in Hong Kong's New Territories as of Dec. 31, primarily along rail lines. The company has said a majority of the farmland is in various stages of land use conversion.
Converting farmland for residential developments requires approvals from authorities and other stakeholders in a process that is seen as being complex and long, often running into years.
SHK's Kwok lamented on Thursday that it was "heart-breaking" to see Hong Kong "falling apart" as a family.
He was speaking to reporters after the company posted results for the fiscal year ended June 30. SHK reported a 10% decline in net profit for the year to HK$44.91 billion ($5.74 billion) because of smaller valuation gains on its properties than a year earlier.
It expects a grimmer year head. The company said the operating environment in the city has been deteriorating since June, mainly due to social unrest.
SHK officials said they are targeting contracted sales of HK$40 billion annually in the medium term. In the last fiscal year ended June 30, the company achieved contracted sales of HK$65 billion, well exceeding its goal of HK$47 billion.
While government data show that prices of private domestic units in June and July stayed close to the record level reached in May, property services firm Cushman & Wakefield has said it expects a steeper fall of 2.7% in August.
"Should the current unrest continue, we would expect a further drop in home prices by 5%-10% through the end of this year," Alva To, the firm's head of consulting for Greater China said in a statement this week.
In mainland China, SHK achieved contracted sales of about 4.60 billion yuan ($650 million), helped by projects of its own or joint ventures in Guangzhou, Foshan and Shanghai.
Controlled by the billionaire Kwok family that also has business interests in telecommunications, logistics and media, SHK has been boosting its real estate operations in major Chinese cities just as mainland developers continue to grow their presence in Hong Kong.
Despite some signs of softening, city-specific housing policies launched by authorities have "effectively stabilized the market" in the mainland, SHK said.
The company declared a final dividend of HK$3.70 per share, increasing its full year payout to HK$4.95 per share, an increase of 6.5% from last year.
Its shares fell 0.8% to HK$116.90 in Hong Kong before the results were announced. At that price, SHK has a market capitalization of about HK$339 billion, the most among developers listed in the city.
-- Benny Kung