K Wah International chairman Lui Che-woo receives an interview with China Daily on Feb 6, 2018. (ROY LIU / CHINA DAILY)
The Hong Kong government should source more land to increase the supply of homes in a bid to cool down skyrocketing prices, Lui Che-woo, chairman of real-estate developer K Wah International, urged on Tuesday.
“Hong Kong is a unique place, a place with a sound legal system and favorable business environment. Everyone in the world would want to live in Hong Kong, that boosts the city’s house prices. The government should allocate more land for residential development to solve the supply and demand contradiction,” he said at a media briefing.
Everyone in the world would want to live in Hong Kong, that boosts the city’s house prices
Lui Che-woo, K Wah International chairman
With home ownership becoming a burden for the young generation, Lui mentioned that the Guangdong-Hong Kong-Macao Greater Bay Area development is still at an early stage, and will give Hong Kong’s young people a great opportunity to thrive.
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K Wah has a land reserve 800,000 square meters in the GBA. The company successfully acquired six prime sites in Hong Kong, the Yangtze River Delta and Pearl River Delta regions last year, with an aggregate gross floor area of 420,000 square meters.
The company spent HK$17.1 billion on land acquisition in the past year, taking its debt to HK$18.5 billion; the gearing ratio increased from 14 percent in 2016 to 34 percent last year.
“We believe the debt ratio would come down to a healthier level this year. We can have HK$4 billion to HK$5 billion of capital re-streamed even if we sell nothing this year. The investment in land acquisition will be paid off in the near future,” said Oliver Lam, K Wah’s chief financial officer.
K Wah net profit attributable to equity holders grew 23 percent to HK$3.9 billion for last year, while revenue grew 17.36 percent to HK$11.29 billion, boosted by sales of residential projects in Hong Kong, Shanghai, Guangzhou and Dongguan.
Contracted sales for the year reached HK$12.6 billion, exceeding the HK$10 billion benchmark for the third consecutive year. Of this about HK$2.9 billion was recognized in the accounts for the year while the remaining of HK$9.7 billion is expected to be recognized for the current year or next year, underpinning the group’s future profitability.
READ MORE: HK retains top spot for luxury homes in Asia
The company has completed two five-year revolving credit and term loan facilities of HK$8 billion and HK$7 billion, at lower cost, while extending the debt maturity profile, enhancing the flexibility of its finances and funding capability.
A final dividend of 13 HK cents per share was declared, taking the total dividend for the year to 18 cents.
K Wah shares plunged 3.7 percent to HK$5.20 on Tuesday, with most of the fall coming after the midday earnings announcement.
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