Sun Hung Kai Properties

Developers retreat from 'war' on sales

PUBLISHED : Wednesday, 25 November, 1998, 12:00am
UPDATED : Wednesday, 25 November, 1998, 12:00am

The rivalry between developers for home buyers appears to have eased slightly as they tend to avoid direct competition in launching sales of new projects, analysts say.

With prices more stable and an improvement in buying sentiment, more orderly sales had returned to the primary market, they said.

Competition between developers has been fierce for most of the year, with companies undercutting each other on prices. The price war was especially tough in August and September.

Analysts said the lack of direct competition from new project launches had contributed in part to the successful sale of Sino Land's Island Harbourview at the weekend.

The 832-unit second phase development of Villa Esplanada in Tsing Yi, a potential competitor to Island Harbourview, did not come on to the market as early as was expected.

The project's developers said they were yet to finalise the sales schedule. The project is being developed jointly by China Resources Enterprises, Sun Hung Kai Properties and Cheung Kong (Holdings).

Hong Kong Property Services (Agency) managing director Michael Choi Ngai-min said competition between developers had eased after many cashed in on increased sales of flats since October.

The situation was much improved from the cut-throat competition seen from April to September when developers undercut each other in a bid to hasten sales, he said.

Now that the market was more stable and there was upside potential in prices, developers appeared less willing to dump flats at big discounts, he said.

Analysts said further price competition would not benefit developers, but only take residential prices to new lows.

Mr Choi said developers would remain prudent in fixing prices as a large supply of new flats would be released in the next few months.

Centaline Property Agency managing director Shih Wing-ching said competition was not so tense now that developers would prefer to release projects in a more orderly way.

But some developers remained concerned about potential competition and were hoping to cash in on sales as quickly as possible.

Banks would remain tight in their lending policies towards developers, who would have to rely on the proceeds of property sales to finance future land acquisitions if government land sales were to be resumed next year, he said.

Mr Shih expected developers would be slightly more demanding in setting prices for new flats.

However, any price increases were likely to be limited in order to lure buyers, as the peak of new residential supply had not yet passed.

Several thousands new flats are expected to come on stream in the next two to three months.

Sino Land expects to release the 480-unit Greenfields joint venture in Yuen Long next month. Neighbouring it is Sun Hung Kai Properties' 320-unit Villa Premiere, which will be released soon.