Swire Pacific's chairman believes the government's property cooling measures are paying off, but he warns that rising competition for skilled workers will push up wages and prices.
In an interview with The South China Morning Post, Christopher Pratt said Swire was looking to expand its property investment footprint across China and Southeast Asia, and the firm had high hopes of Cathay Pacific's ties with shareholder Air China, which he felt would define this decade for the airline.
Pratt said measures such as the doubling of stamp duty and a law that prohibits developers from listing the gross floor area of flats in sales brochures "had taken the heat out [of the market and] in that sense they have been successful".
But he was reluctant to estimate the size of a possible fall in prices. "Do I think there will be a major crash? I don't sense the conditions exist for such [a thing] to happen … supply is still constrained; money is still historically cheap. In the absence of the increases in stamp duty who knows where the market would be?"
Swire Properties was seeing "good retail demand in its property portfolio" with "no evidence of substantial softening".
But Pratt warned that competition for skilled workers including those working at the airport and construction would likely increase salaries and costs.
"Prices in several industries will go up," Pratt said, adding these would include hotels and the service sector. He said Haeco, Swire's aircraft maintenance firm, had awarded a "hefty" pay increase and also had the benefit of cheaper operations at its Xiamen maintenance base.
"Businesses that depend on cheap labour will struggle," Pratt said, adding the government was unlikely to allow cheaper imported workers.
Turning to other areas, Pratt said for its most recent developments Swire Properties had partnered with Sino Ocean Land on schemes in Beijing and Chengdu , while in Guangzhou "we were largely on our own".
He was emphatic that Swire had absolutely no plans to sell down its 83 per cent stake in Swire Properties, adding there was "good sales growth" at TaiKoo Hui in Guangzhou and Taikoo Li Sanlitun in Beijing.
The firm was keen to expand its "East" hotel brand, although the hotels would only be incorporated as part of larger mixed-use commercial developments, Pratt said.
Turning to Southeast Asia, Pratt said that since Swire Properties opened an office in Singapore, it had been eyeing a couple of projects there, "but we have not agreed a price". "We are actively looking at business in Indonesia. We do have the will to expand in Southeast Asia - we intend to do more in the coming years," Pratt said.
On Cathay Pacific's relationship with Air China, Pratt said "over the years we will do more with them", explaining there would be "tremendous economic gains" from working closer together.
Pratt was also optimistic about prospects for its offshore shipping business. He reiterated comments by John Swire & Sons chairman James Hughes-Hallett last month that high oil prices meant increased oilfield exploration and production activity which would lead to more business for the offshore vessel fleet.