麦格理-港股-房地产行业-香港房地产：到处是未开发的土地-2019.9.19-25页.pdf

Please refer to page 23 for important disclosures and analyst certification,or on our website September 2019 Hong Kong EQUITIES Potential positive impact on developers Source:Macquarie Research,September 2019 Land supply and demand up to 2026 Source:Task Force on Land Supply,Macquarie Research,September 2019 Net addition of built-up land during 1993-2016 Source:Development Bureau,Macquarie Research,September 2019 Centaline property price index CCL CCL Mid/small apartments CCL-Large apartments Price change YTD 6.1%11.6%12.0%WoW-0.3%-0.3%-0.1%2017 5.3%4.9%7.5%2016 13.2%13.8%10.4%2015 7.7%8.1%5.4%2014 2.6%2.8%4.3%Vs.prev peak-2.0%-2.2%-2.5%Price index Latest 184.96 185.26 183.43 Dec-17 174.37 174.05 176.00 Source:Centaline,Macquarie Research,September 2019 Analysts Macquarie Capital Limited David Ng,CFA +852 3922 1291 Nicholas Ting +852 3922 1398 HK Property Land everywhere but no development Key points Land resumption is a poorly understood mechanism that could solve the serious land supply issue facing HK.In this deep dive we show resumption scenarios,which,if implemented,could benefit developers.Our base case is that normalcy gradually returns with no supply shock.Land Resumption:a poorly understood mechanism Land resumption benefits developers.We estimate fair value upside of 10-37%for four major developers if their farmland is bought out by HKSAR,as most of the area was purchased years ago below HK$100 psf versus the latest compensation for resumed land at HK$1,350 psf for essential projects.If developers choose to participate in the development of these resumed sites into public/private housing,we expect additional upside of 33-82%,resulting in 1.2m units for 2m population over the next 25 years,according to our scenario analysis.However,such heroic efforts require strong consensus among stakeholders and trust in authorities,making it extremely challenging to execute in the near term.Interference in asset price either provokes owners(price too low)or attracts corruption accusations(price too high).Between the two,the latter is less damaging to the current torn society.While none of the five demands by protesters mentions housing issues or income/wealth inequalities,we believe they are part of the deep-rooted and profound conflicts which frustrate the youth.The Chief Executive(CE)may now be under more pressure to tackle the housing problem,but near-term focus will be on subsidies to SMEs to withstand the economic downturn and tactics to distance the peaceful moderate protesters from the extremists.Subsidized housing supply is far from adequate A new class of subsidized homes recently launched set income ceiling at HK$37k/month,implying 80%of working class cannot afford private homes.We estimate 50%of families struggle to rent a two-bedroom unit.At the core of the issue is land supply.Among the four short-to-medium term land supply options outlined by the independent Task Force on Land Supply and fully endorsed by HKSAR,the one most impactful for developers is tapping into agricultural land in the New Territories through land resumption(government buying sites from owners at relatively fixed prices)or conventional land use conversion from agricultural to residential to build private units by developers.Economic weakness to return focus to bread and butter We maintain our base case:1)HKSAR and Beijing governments clarifying their stance without further concessions;2)protests subsiding in 1-2 months;and,3)markets attention shifting to a weak economy through 2Q20.The worsening economic outlook,which protesters hope will pressure authorities to yield,may backfire and distance the extremists from business owners and staff.We expect a rise in the unemployment rate from the current low level of 2.9%.Of the 3.9m people employed in HK,a third work in SMEs,which have been severely hit by the trade war and protests.Near-term relief measures are more important to them than housing problems.LandLandresumption developmentHenderson44%69%113%SHKP17%33%49%New World32%79%111%CK12%31%43%TotalDemand SupplyShortfallLand for residential uses768 660 -108 Land for economic uses196 61 -135 Land for infrastructure and facilities1,661 1,089 -572 Total2,625 1,810 -815 Up to 20262,1305582025,6702,54269802,0004,0006,0008,00010,0001993-20002001-20082009-2016hectaresReclamtionRezoning,resumption and others 19 September 2019 2 Macquarie Research HK Property 19 September 2019 2 The chart below summarizes our house view on land resumption and how it can accelerate unlocking farmland and brownfield sites,along with the Task Force on Land Supplys more prominent proposals.Details are documented on Pages 10-15.Fig 1 Our proposal and Task Forces current proposals Source:Development Bureau,Task Force on Land Supply,Macquarie Research,September 2019 Macquarie ProposalXABCDMethodologyLand resumption and developmentTapping into private agricultural landBrownsite DevelopmentReclamationPrivate recreational lease sitesTimelineFastMediumMediumLong-TermPotentially the fastestArea1,000 hectares 1,000 hectares(some may overlap with brownfield sites)1,300 hecatres(540 concentrated,760 scattered)1,500 hectares32-172 hectaresTask Force ProposalRelase Fanling golf club land for housing purposesCommentsThere is some overlap on agricultrual land and brownfield as a lot of the land held by private developers consiste of both types.The difference between farmland and brownfield is that brownfield is abandoned farmland that is now used for other purposes such as storage and logistics.Applciation for lease modifications has been the dominant way of converting them into residnetial use for the past 10-15 years,but take a long time to materalize.This option is a long term option,regardless of what happens between X,A&B.SummaryGovernment purchases the farmland and brownfield sites that are in the ownership of private developers in a large scale.After planning and rezoning,Government invites developers to participate in land bids and build both private and public housing.Government provide infrastructure investments for the private agirculurla land.Developers will contribute by building both public and private housing.This can be done either via government carrying land resumption or developers applying for lease modifciationsReallocating industrial activites in brownfield sites and redevelop them to new development areas.Significant portion of these brownfield sites are also in the hands of developers.This can be done either via government carrying land resumption or developers applying for lease modifciationsReclamation of land from sea to provide land use to aid in new town developmentWe believe land resumption is the fastest way to unlock farmland and brownfield sites.It requires government to conduct a large scale purchase.After that,the government can invite developers for tender and build both public and private housing.Our suggestion is to use X to unlock A&B in a more efficient manner,and will grealy shortern the inefficienies of lease This option is for long term land supply,and does not allievate short This could be a wildcard in our view,as it could release 32 hecatres of land to housing use by 2024.But it is a relatively small amount of land in comparison to the other Macquarie Research HK Property 19 September 2019 3 Fig 2 HK Developers and Landlords under our coverage Source:Factset,Macquarie Research,September 2019;as of 19 Sept prices PB(x)YieldNAVNAV vs TickerCompanyTPPriceRating2019F2020F2019F2019Fmkt value*2019F2020F20182019FDevelopers16 HKSun Hung Kai159.17113.70OP8.99.00.584.5%242.60(53%)40%40%13%13%83 HKSino Land13.5311.70N6.48.10.544.9%28.73(59%)56%39%(13%)(17%)17 HKNew World14.2210.08OP11.310.70.465.0%21.37(53%)22%25%34%683 HKKerry33.6024.45OP6.26.10.365.5%85.92(71%)41%45%20%30%173 HKK Wah6.964.11OP4.53.80.344.8%15.02(73%)42%39%30%32%12 HKHenderson42.2138.00N11.810.50.574.7%63.07(40%)39%40%23%(7%)20 HKWheelock70.2745.20OP6.46.00.363.6%127.16(64%)55%54%37%36%1113 HKCK Asset95.1954.75OP7.08.10.593.8%117.15(52%)52%49%8%(16%)Median6.78.10.504.8%(56%)41%40%20%21%Landlords101 HKHang Lung23.9617.70OP18.316.20.574.2%36.54(51%)68%67%12%19%14 HKHysan48.7031.20OP12.212.00.434.8%88.25(65%)82%81%4%3%1972 HKSwire Properties35.8625.60OP18.317.00.523.5%62.43(59%)64%67%11%5%19 HKSwire Pacific111.1374.50OP13.111.40.394.3%222.93(66%)25%18%23%20%4 HKWharf30.4616.92OP7.97.30.373.8%52.19(67%)38%40%19%14%1997 HKWharf REIC46.0543.15N12.812.40.605.0%87.01(50%)80%80%18%16%HKL SPHongkong Land8.465.70OP12.712.30.344.0%13.76(59%)51%55%10%6%Median12.812.30.434.2%(59%)64%67%12%14%REITs2778 HKChampion7.915.08OP19.618.50.445.3%13.48(62%)70%71%20%20%823 HKLINK82.9388.00UP28.626.60.973.5%113.96(23%)73%73%11%11%87001 HKHui Xian REIT2.653.25N17.116.50.717.9%3.59(10%)63%63%14%21%MAGIC SPMapletree Greater China1.31Median19.618.50.715.3%13.5-23%70%71%14%20%PE(x)EBITDA marginNet gearingMacquarie Research HK Property 19 September 2019 4 The current state of the HK land and housing market Wealth disparity widens as housing market spirals out of control Looking back at the major protests since the handover in 1997,almost all of them have targeted political events:Article 23 in 2003(CE Tung Chee-hwa),universal suffrage in 2014(CE CY Leung)and the current Anti-Extradition Law Amendment Bill(“AntiELAB”)(CE Carrie Lam).Ironically,CE Donald Tsang governed seven years of relative peace and negotiated the only political reform between Beijing and pro-democracy parties,but he was put in jail for corruption at the end of his term.We do not have all the answers to the current predicament.However,in view of the relatively calm historical period under British colonial rule,we believe HKSAR locals are unlikely to agitate over universal suffrage until their livelihood or security(economic and political)is under threat.AntiELAB serves as the last straw on the camels back,allowing the public to vent its frustration suppressed over the last 10 years.Most experts agree that while the current unrest was triggered by AntiELAB,the core issue should be ongoing frictions resulting from income and wealth inequalities,which further exacerbate the inclination of resources to the incumbents.As an international financial hub drawing global(including lots from the mainland)talent and offering competitive packages,it is conceivable that an increasing percentage of locals lags behind the new-comers in income growth.There is a continuous housing demand for accommodation as well as storage of wealth from the newcomers and the wealthy class.The cooling measures introduced over the last 10 years were supposed to curb price growth through raising the entry barriers and imposing higher transaction costs.These measures may have calmed what could otherwise have been an overheated market,but they have also made it more difficult for first-time buyers to own property.As a result,the gap between those who own and those who dont has been widening.Thanks to strong household balance sheets and prudent credit policies,the last few economic downturns did not result in serious financial distress or reshuffling of wealth.Those who have waited patiently(or exited in hope)for a bottom-fishing opportunity over the last 10 years did not have a chance to do so and may have been priced out of the market forever.The rich get richer,fuelled by those who cant afford to buy According to the by-consensus in 2016,48.5%of the population lived in own homes,of which 2/3 had already paid off their mortgages.They present strong purchasing power without the constraints imposed by credit tightening.As long as the view of long-term property price appreciation remains unchanged,many homeowners are willing to bear additional stamp duties levied on multiple home ownership,especially in view of a lack of safe alternative investments locally or overseas.For the remaining 1/3 who still had to service their mortgages,leverage is relatively low.Besides the owner-occupiers,there was 16%of population renting private homes in 2016,up from 11%in 2006.We expect this ratio to continue to increase as,while these tenants help their landlords pay off mortgages,the tenants struggle to save up for the rising down-payments of their first homes in face of cooling measures and flattish income growth.Fig 3 2006 breakdown of accommodation Fig 4 2016 breakdown of accommodation Source:HKSAR,September 2019 Source:HKSAR,September 2019 Private homes34%Home Ownership Scheme(HOS)18%Tenants in private units12%Tenants in Public Rental Housing(PRH)31%Around 25%of owned homes(Private homes+HOS)are with mortgageMonthly incomethreshold for 2 ppl family for PRH:HK$10.8kMonthly incomethreshold for 2 ppl family for HOS:HK$22kPrivate homes,33%Home Ownership Scheme(HOS),16%Tenants in private units,16%Tenants in Public Rental Housing(PRH),29%Around 17%of owned homes(Private homes+HOS)are with mortgageMonthly Income threshold for 2 ppl family for HOS:HK$58kMonthly Income threshold for 2 ppl family for PRH:HK$18.7kMacquarie Research HK Property 19 September 2019 5 Not only is it tough to buy,but renting is becoming challenging too.Using the latest median income figures,about 20%of the working population made less than HK$12k per month,making most private residential rental units(HK$40 psf/mth x 300 sqft)out of reach.About 52%made less than HK$20k per month.Assuming a household of two wage-earners with half of their total gross income going to rentals,they cannot afford to rent a 500 sqft private unit.As for public housing,the shortage of supply is also a severe problem.There are two broad types of public housing in HKSAR:Public Rental Housing(“PRH”)and Home Ownership Scheme(“HOS”).The average waiting time for general applicants for PRH is around 5 years.As for HOS,which resumed in 2014,all projects that were launched were oversubscribed,highlighting the imbalance between supply and demand for public housing.Real estate ownership,not the paycheck,is the road to riches According to a study done by New Century Forum,the median starting monthly salary of a university graduate was only HK$14.4k.The median salary of all employees with university qualifications was HK$28.8k,which,of course,was distorted by the long tail of highly paid senior staff.The shocking discovery was a decline in median salary for university graduates from HK$20.2k in 1987 to HK$14.4k in 2017,versus a 100%jump for the general workforce from HK$8.7k to HK$17.3k during the same period.More than 16%of university graduates needed to settle for unskilled work.The number of university graduates in the workforce was up 7x from 131,900 to 1.08m between 1987 and 2017.Over the last 10 years,the increase has been 60%.This has led to too much talent chasing too few skilled jobs.The global trend of migration of labour-intensive industries to developing countries and technology-driven job dislocations has played a role but,more specific to HK,in our view,is an overemphasis of real estate investment and a lack of resources allocated to newer industrie