CONTRARY to what some believe, bubbles can be good for the property market, said the executive director of Hong Kong’s Cheung Kong (Holdings).
Mr Justin Chiu told reporters yesterday at the showflat of his company’s latest project here that he likes property bubbles because they fuel sales volumes and price rises.
Mr Chiu – who was moved to dress up as James Bond at launch parties in 2004 to stimulate interest – believes that what he calls optimum sentiment can buoy prices by up to 30 to 40 per cent. Without it, prices can fall by 50 per cent.
‘I like bubbles. It’s my religion. In a property market or any market, if there is some bubble, people will be more enticed to go into the market.’
‘If it’s a flat market like in 2003 (when Sars hit), even though I give you a discount and I dress up like James Bond…I sell fewer than 10 units.’
Mr Chiu, who stressed that property investment was a long-term game subject to short-term fluctuations, said people would not invest in property unless there was confidence. ‘If no one is buying, prices will fall…That’s why I said I like bubbles. Bubbles mean everyone is coming in.’
At Cheung Kong’s latest project, The Vision, sales are reported to be brisk despite relatively high prices. Buyers have bought 210 units of the 99-year leasehold condo in West Coast Crescent, attracted by early-bird incentives discounting quoted prices by 2 per cent to 3 per cent.
The official launch is to be held on Friday, but per square foot (psf) prices for the apartments have already set a net high benchmark for the West Coast area.
The 281 apartments were mostly priced around $1,000 psf to $1,200 psf. All except one of the 14 strata terrace houses – costing $3 million to $3.2 million apiece – have been snapped up.
Mr Chiu, who is nearly 60, says the prices are reasonable given the project’s location and quality finishings. ‘If the price is not reasonable, we would not be selling over 200 units in two weeks.’
Cheung Kong’s next project will be a site in Upper Thomson Road, which it won the tender for last November with a price of about $533 psf per plot ratio. Mr Chiu said it is likely to attract mainly locals and Chinese nationals.
He said Cheung Kong was looking at a few pieces of residential land. And together with Hongkong Land and Keppel Land – its partners for the Marina Bay Financial Centre (MBFC) project – Cheung Kong is also looking at buying offices.
More details will be revealed at the topping-out ceremony of Tower Two of MBFC next month.
Mr Chiu noted that the Singapore property market is now enjoying boom conditions, and government measures will not alter that, though there may be other risk factors such as wars. He said the key lies in the message given out with the measures, instead of the effectiveness of the measures.
‘To me, government measures are not important at all unless they are very drastic…Government is only a small factor of the free market forces. Unless it takes very strong measures…I don’t think it can alter the trend, (but) it can slow down (the market). I don’t think any Asian government is prepared to wreck the market.’
Source: Straits Times, 24 Mar 2010