Local developers shrugged off a move by DBS yesterday to raise property mortgage rates, saying sales strategies won't be affected.

Two of the largest Hong Kong developers, Cheung Kong Holdings and Henderson Land, said they won't change their sales deployment in the face of the interest hike.

Tony Tse, general manager of sales for Henderson Land, said the rate hike has been expected.

"It gives a clear signal to homebuyers on the interest reversal, and dismisses market uncertainties, rather than scaring (buyers) off, which is a positive for the property sector," he said.

Tse added that the company's sales strategy will remain consistent, and said: "We did carry out sales under a high- interest environment before. Interest trend is not our main concern.

"Overall, we believe the purchasing power won't be undermined, because the market is rich with liquidity."

Cheung Kong Holdings Senior Sales Manager William Kwok said that the market and developers have anticipated the rise.

"We're aware many local lenders cut their mortgage sweeteners, such as cash rebates, with the narrowing interest spread."

Kwok added that the extent of the interest adjustment is minor, which he said won't cool off the market. He predicted that the market will remain stable in the second half.

Regarding some developers slashing their flat prices in an effort to boost sales, Kwok said those are individual cases involving relatively small projects that don't reflect the market climate.

Property consultancy firm Colliers International Executive Director Antonio Wu said the mortgage rate increase appears unlikely to hurt the local property market.

"For investment property, average rent still stands at a high level, which could sufficiently cover the increased expenses for landlords," Wu said.

"We believe the rent will surge by 10 to 15 percent throughout 2008," he predicted. "The lucrative return yield will be the key driver to draw investors into the property market."

Eddie Hui, a professor in the Department of Building and Real Estate at Hong Kong Polytechnic University, said the adjustment may have a physiological effect on buyers.

He believes DBS has triggered the first wave of rate increase, and "together, with the weakening equity, the attitude of buyers is expected to be more prudent in the short term".

(China Daily 06/17/2008 page2)