Flats offered at below market prices
Cheung Kong (Holdings) is offering flats in its latest project at prices below the secondary market in the area, reflecting slumping sales and growing fears of more cooling measures after chief executive-elect Leung Chun-ying takes office next week.
The first batch of 138 flats at The Beaumount in Tseung Kwan O was priced at an average HK$5,313 per square foot for cash buyers.
The 915 to 1,001 sq ft flats are being offered at between HK$4,993 and HK$5,905 per sq ft, or HK$4.5 million to HK$5.8 million each. Later, a second batch was offered at HK$5,324 per sq ft. The 1,777-flat development is the biggest to go on sale this year.
The aggressive pricing comes after secondary transactions last week dropped to a 21-week low, and is as much as 25 per cent below the HK$6,600 per sq ft average transaction price in Tseung Kwan O.
If The Beaumount fails to generate strong sales, it could trigger a wave of discounting by other developers, said Eric Yuen Chi-fung, head of research at Guoco Capital.
Sammy Po, a director of Midland Realty, said residential prices were close to their peak, having risen about 10 per cent since January.
'Investors may opt to cash in on their flats as Leung shows his strong determination to control home price growth,' he said.
The Centa-City Leading Index, which tracks secondary market home prices - with the level in July 1997 set at 100 - shows flat prices in the city rose 0.3 per cent from the week before to an index level of 104.14 in the week ending June 17, beating the October 1997 record of 102.93.
With most home seekers sidelined, sales in the 50 largest private housing estates monitored by Ricacorp were down 14 per cent, to just 129, in the week of June 18 to 24. There were no sales at nine estates, including Grand Waterfront in To Kwa Wan and Tierra Verde in Tsing Yi.
The sharpest fall was in Kowloon, with just 45 deals at the 20 major estates, compared with 57 the previous week. Only four flats changed hands in Taikoo Shing, Hong Kong's most actively traded housing estate.
Ricacorp director David Chan said it was the sixth consecutive week of fewer than 200 deals - the lowest for the past 21 weeks.
Midland Realty predicted that The Beaumount's low-price strategy would paralyse the secondary market in southeast Kowloon.
Secondary transaction prices in Tseung Kwan O were currently HK$6,600 per sq ft, and secondary market prices at Lohas Park, the closest comparable development to The Beaumount, were HK$5,670 per sq ft, Midland Realty said.
Midland Realty said 12,000 new flats would be available for sale in the second half and 3,000 new flats had been sold since January. Last year, 9,000 new flats went on the market.
New World Development chairman Henry Cheng Kar-shun said yesterday that he did not expect Leung's administration to introduce policies that would hurt the property market.
'The new government will definitely not crash the market, which is a pillar of Hong Kong's economy,' Cheng said, adding that the Home Ownership Scheme and the public rental housing programme, key components of Leung's policy, would not affect the private market because they had income limits and catered to different market segments.
In 1997, incoming chief executive Tung Chee-hwa pledged to tackle soaring property prices by turning out 85,000 flats a year for the next decade. But property prices plummeted more than 40 per cent just months later, and in July 1998, the government suspended land sales until the following financial year.