A cluster of newly-completed apartment buildings in the city await home buyers craving for a pond view. CNS

HONG KONG: Imagine: home prices continue to rise in 2010, with no bubble-bursting in sight. That's the cheery forecast offered yesterday by global property development heavyweight, Cheung Kong Holdings.

Hong Kong's luxury home prices may rise as much as 15 percent this year, with no popping-prone bubbles anywhere in evidence in the city's and the mainland's property markets, said Cheung Kong.

Prices for luxury homes may increase 10 percent to 15 percent this year, and for new mass-market homes 15 percent to 20 percent, said Cheung Kong Executive Director Justin Chiu.

There's even more good news from Cheung Kong. Revenue from China home sales may exceed 30 billion yuan ($4.4 billion) this year, Chiu said. That compares with his September forecast of 1.5 billion yuan for 2009 sales.

"I don't really see a bubble," Chiu said, adding, "There shouldn't be too much concern about the governments trying to crush the market."

Chiu's comments pit him against Singapore-based investment guru Jim Rogers, who has said that real estate prices in the city and Shanghai are in a bubble and "should decline".

Less ominous, albeit cautious, were the comments of Fred Hu, Goldman Sachs's chairman for Greater China, who said on January 18 that property prices in China require monitoring for signs of bubbles forming.

Home prices in Hong Kong, a trading and financial hub for the mainland, are at their highest in almost 12 years, leading the World Economic Forum and Goldman Sachs Group Inc to their cautioning investors about the formation of asset bubbles.

On the other hand, and echoing Cheung Kong's optimism, Mark Mobius, who oversees $34 billion of developing-nation assets at Templeton Asset Management Ltd, disagrees with Rogers, saying on January 7 that the bubble in China's property market isn't about to burst. Of course, signs of regional property market heating are ample: Property prices in 70 cities across the mainland climbed 7.8 percent in December, the fastest pace in 18 months. Hong Kong's real estate prices rallied the most among the world's major housing markets last year, according to property adviser Knight Frank LLP.

Prices in the last six months of 2009 rose by 30 percent in Hong Kong and 20 percent on the mainland, leading Chiu to conclude that speculators may be at work.

"We think that given the substantial increase in such a short time, there could be a speculation element," he said. "That's why I advise buyers to really see whether they have the means to commit to buying an apartment. They should be careful."

Whatever the impact of speculators may have been so far, easy-money policies clearly have played a role. Record new loans fueled a 75.5 percent jump in the mainland's property sales last year.

Despite the nervous naysaying of some analysts about property market prospects, home sales on the mainland, Hong Kong and Singapore by Cheung Kong, the world's second-biggest developer by market value, may exceed HK$100 billion if the company obtains government consent for all projects, Chiu said.

China Daily/Bloomberg News

(HK Edition 01/21/2010 page4)