Hong Kong's property market is cooling, with a large residential project in Tseung Kwan O generating a lukewarm response from buyers on launch day - even though flats were being offered at less than secondary transaction prices.
Cheung Kong (Holdings) said it sold 200 flats in joint-venture project The Beaumount in the first two hours after it went on sale to 7pm. The sale is ongoing. Market observers said only 10 per cent of the 2,000 registered buyers decided to proceed with the purchase, showing potential buyers were staying on the sidelines until chief executive-elect Leung Chun-ying announces the new government's housing policy after he takes office next week.
Sammy Po, an executive director at Midland Realty, said the initial response was not spectacular, pointing out that many registered buyers did not even show up. 'Most buyers are local residents and unlike previous launches of new projects, we did not hear lots of people speaking Mandarin in the sales office,' he said
The Beaumount, which is about 10 minutes' walk to Lohas Park MTR station, is close to an industrial area and is considered to have few community facilities.
This less desirable location resulted in the first batch of 138 flats at The Beaumount being priced at an average HK$5,313 per square foot for cash buyers, with the cheapest flat offered at HK$4,993 per sq ft. The launch price is as much as 25 per cent below the HK$6,600 per sq ft average transaction price in Tseung Kwan O. The developer released the price list of 578 units on Monday but offered just 200 flats, or 34 per cent, of the total for sale yesterday.
Analysts believed the move signalled the developer was concerned a poor sales response would send a negative signal to the market. 'The sales outcome will serve as an indicator for the outlook of the residential market as it is the biggest project to go on sale this year. The outcome will also affect other developers' pricing strategies,' said David Ng, an analyst at Macquarie Equities Research.
He estimated the total development cost of the project was HK$4,000 per square foot, inclusive of the HK$2,000 per sq ft land cost, while the remaining were construction and interest expenses.