At a company general meeting on Thursday, Billionaire Li Ka-shing said Hong Kong property prices are still reasonable and will rise in the long term.

The 81-year-old chairman of Cheung Kong (Holdings) Ltd, the world's second-biggest developer by market value, said it is a good time now to purchase property in the city, even as the government is concerned about rising prices and bubble risks.

With these worries in mind, the government has in recent weeks introduced a number of measures, e.g., increasing land supply, to avert a real estate bubble and ease concerns that property has become unaffordable for many of the city's residents, since prices have risen 39 percent since January 2009. Factors driving these gains have included a supply shortage, ample in-flowing liquid assets, buying sprees of rich mainlanders and other mega-millionaires, and two-decade-low interest rates.

Home prices in Hong Kong have risen 33 percent since March last year, when Li told investors to buy real estate.

"If you look at post-war Hong Kong, over the last 70 years and if you buy properties at a specified time" their value will always go up in the long run, Li, Asia's second-richest man, said Thursday after two of his companies, Cheung Kong and Hutchison Whampoa Ltd, held their annual general meetings.

Predictions by Li, who correctly forecast in 2007 that the mainland's stock-market bubble would burst, are closely watched in Hong Kong, where the media has dubbed him "Superman" for his investing acumen.

Li said investors with excess cash should consider putting their money in the property market.

Prices at the first two government land auctions held this fiscal year were "reasonable" and not too low, Li said.

The SAR government, which gets revenue from auctioning land in the city, sold a plot of land in the Fanling area of the New Territories at less than surveyors' estimates on May 24. The first auction of this fiscal year, on May 11, fetched a third less than the median estimate.

Cheung Kong is one of three developers who will bid to build a residential and commercial project on top of a station run by MTR Corp, the city's government-owned subway operator.

Li said his company will continue to acquire land in the city for new home construction and that he took part in Prudential Plc's $21 billion rights offer.

The billionaire said he has recently bought additional shares in Cheung Kong and Hutchison Whampoa and will continue to do so.

"His prediction on properties and the stock markets have always been quite accurate and this time it looks like he may be right again," said Francis Lun, general manager of Hong Kong-based brokerage Fulbright Securities Ltd. "From what we see, many of our clients are sensing (share) prices have reached the bottom and are ready to move anytime."

Bloomberg News

(HK Edition 05/28/2010 page3)