Tsang comments on flat shortages premature: Salomon Smith Barney

HONG KONG (AFX-ASIA) - Financial Secretary Donald Tsang's prediction that there will be a shortage of flats in Hong Kong in three years time is premature, according to Salomon Smith Barney. In a research report, the broker said Tsang's comments were based upon the falling number of completions scheduled for the next few years after a peak 105,304 units this year.This year's figure includes 54,973 public rental flats.The research house said the key figure to watch when gauging whether there will be a property shortage is not completions but rather the absorption or the presale rate of the units."If few units have been presold by the time they are completed, then even lower production volume is not an issue."Salomon Smith Barney said at the current rate, presales and sales of completed units in the primary market are roughly 1,300 per month or an anualised 15,600 units.Given the current rates, the research house said there is a greater risk of oversupply in the next 1-2 years."This is especially evident by the fact that residential vacancy has been increasing," it said.

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