BloombergNew World Development Co., the Hong Kong developer controlled by billionaire Cheng Yu-tung, doesn’t believe the city is experiencing a property market bubble and says home prices will rise as much as 10 percent next year.
Cheng, who chairs the company, told reporters after New World Development’s annual general meeting that home prices in Hong Kong should rise by 8 percent to 10 percent next year.
“Land supply in Hong Kong is limited, while the economy is recovering, and people need to buy homes,” he said.
Interest rates should remain unchanged during the first half of the year，Cheng said. He predicted the Hang Seng Index will rise to between 25,000 and 30,000 points, from current levels of below 22,000.
Hong Kong should speed up land conversion, Henry Cheng, New World Development’s managing director, said earlier. The company will spend HK$7 billion ($903 million) converting farmland into developments and will participate in Hong Kong’s next land auction Dec. 28. Henry is Cheng Yu-tung’s son.
The government is selling two sites in the Tai Po district of the suburban New Territories.
Hong Kong home prices have risen 28 percent this year, boosted by record low mortgage rates and near-zero interest on saving deposits. Hang Lung Properties Ltd. Chairman Ronnie Chan said in a Dec. 4 interview that Hong Kong’s residential market is a “good bet,” a day after billionaire developer Lee Shau- kee forecast a 10 percent price increase in 2010.
New World shares have more than doubled this year, making the stock one of the top 10 performers in the benchmark Hang Seng Index. The stock rose 0.4 percent to HK$16.74 in Hong Kong by today’s midday break.
Chairman Cheng, 84, was ranked Hong Kong’s fifth-richest person by Forbes Magazine in March, tied with fellow real- estate tycoon Joseph Lau, with an estimated wealth of $4 billion.
To contact the reporter on this story: Chia-Peck Wong in Hong Kong at firstname.lastname@example.org