Hong Kong will stop offering residency to foreigners who buy property and unveiled a rent-to- buy program, intensifying efforts to cool prices that have jumped almost 50 percent from 2009. Shares of developers tumbled. The government will temporarily remove real estate from its Capital Investment Entrant Scheme, which was set up to encourage foreigners to invest to gain residency, Chief Executive Donald Tsang said in his annual policy address today. The government in the past year raised mortgage down- payments and increased land supply to rein in home prices that have surged since the beginning of 2009 on the back of record- low interest rates and an influx of Chinese buyers. The Hang Seng Property Index posted its biggest drop since May, as Sun Hung Kai Properties Ltd., the city’s biggest developer, and rivals fell on concern the measures will weaken demand. “There will be a correction of share prices of property companies as housing supply and demand become more balanced,” said Tim Leung, who helps manage about $1.5 billion at IG Investment Ltd. in Hong Kong. “Residents have complained that housing has become unaffordable. The government has the responsibility to force the market to supply homes to the general public.” The Hang Seng property gauge, which tracks the city’s seven biggest developers, fell as much as 3.4 percent and was down 2.1 percent at the noon trading break, reversing an earlier gain. Shares Fall Sun Hung Kai fell 4.2 percent to HK$131. Cheung Kong Holdings Ltd., the builder controlled by Hong Kong’s richest man Li Ka-shing, dropped 2.5 percent to HK$115.60. New World Development Ltd. declined 4.1 percent to HK$16. “Many find it unnerving that property prices have kept rising and years of hard-earned savings cannot even cover a down payment,” Tsang said today to the city’s lawmakers. “They hope that the government will help them realize their aspirations for home ownership.” The government will continue to boost land supply and expects 61,000 new units to come onto the market in the next three to four years, Tsang said. To contact the reporters on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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