Wave of new homes may boost sentiment
The launch of flat sales at several new developments in the coming months may help restore confidence in the property market at a time when secondary-market sales are weak, property analysts say.
Among the developments to be launched are The Riverpark above the Che Kung Temple MTR Station in Sha Tin, where New World Development will sell 981 flats. New World has released a price list for the first batch of 186 flats at an average price of HK$9,200 per square foot, representing a 5 per cent premium over flats in existing developments nearby.
The four-tower development is about a 10-minute walk from Sha Tin city centre and the flats have city or country-park views.
A consortium led by Sino Land has received government approval to begin pre-selling the 548 flats at its Providence Peak development in Tai Po, and they may also go on sale this week. Property analyst Alfred Lau said these developments, and several others due for launch, could bring more than 5,000 flats to market in the next two to three months, compared with 4,800 in the first five months of this year.
'Home prices in the secondary market have risen by 9 per cent already this year and sellers are still aggressively seeking higher prices. This has turned the attention of many home seekers to the primary market, where developers have arranged some flexible payment and mortgage terms,' Lau said. He is an analyst at Bocom International, the investment banking unit of the Bank of Communications.
'We expect new launches to be best positioned to tap such purchasing power. And if they sell quickly, this will help restore buyer confidence in the market,' Lau said.
He believes The Riverpark will draw a lot of market attention because it will be the first large-scale residential project to be launched this year, and in per-square-foot terms the prices are attractive.
The flats at The Riverpark range in size from 660 square feet to 3,029 square feet. Since many were large, they would sell for more than HK$10 million, Lau said.
Other mid-scale projects such as Sun Hung Kai Properties' Century Gateway in Tuen Mun; Cheung Kong's The Beaumont in Tseung Kwan O; and Double Coves in Wu Kai Sha, developed by Henderson Land, New World, and the Peterson Group, may attract more end-users because they will sell for between HK$5 million and HK$7 million.
'We remain cautious about high-priced flats since tighter mortgage controls and the strengthening dollar index may pose a risk of capital outflows, to which luxury units tend to be more sensitive,' Lau said.
Eva Lee, head of Hong Kong and China property research at investment bank UBS, said that against the backdrop of the gloomy global economic outlook and a sluggish stock market, developers were likely to pitch prices of new flats close to those in the secondary market to attract more buyers.
'They are not going to slash prices. But they will want to sell flats quickly to cash in, as the government has put up many land sites for sale,' Lee said.
Data from Ricacorp Properties show secondary-home sales fell 25 per cent to 7,562 transactions in April, while the value of sales dropped by 18 per cent, to HK$34.62 billion. Sales continued to fall in May.
Among projects that have attracted the attention of homebuyers in recent weeks is Kowloon Development's Gardenia in Sham Shui Po, where 208 flats were released for sale last Thursday and 100 had been sold by late on Monday. Total sales revenue amounted to HK$400 million, according to agents.
The Housing Society's Heya Green development in Sham Shui Po has also attracted strong interest, with more than 3,100 applications for the 327 flats on offer.
Also, Emperor International has released a price list for 31 flats at The Prince Place in Kowloon City. The project comprises 36 flats of between 543 square feet and 1,248 square feet, and the flats on offer are priced at an average of HK$10,550 per square foot.
The fall in secondary-market transactions for homes in Hong Kong in April, according to Ricacorp data