Nan Fung prices Tseung Kwan O units at record low
Nan Fung Development yesterday unveiled a record low price for its Tseung Kwan O Plaza development, averaging HK$1,998 per square foot - about 20 per cent below market price for the area.
'We want to attract buyers with attractive prices,' sales manager Victor Mak Yat-king said.
There are worries the move will trigger a new residential property price war, with the launch of a nearby Housing Society development expected within days.
Midland Reality's Angela Kwok said prices were lower than expected, but pointed out it was only a marketing ploy.
With 2,880 flats in the project, the 18 units at the cheap promotional price represented only a small part. 'I expect the rest will sell at about HK$2,500, or the current market price,' she said.
Deutsche Bank analyst Andrew Lawrence said Nan Fung's latest marketing manoeuvre indicated developers were having to cut prices to spark interest.
'Sales have been weak in the first two months of the year,' he said. 'With unemployment still high and negative sentiment from the Budget, we're looking for prices to fall by 8 per cent to 10 per cent this year.'
The Housing Society is expected to launch sales of its Serenity Place project by the end of the week.
Asked to comment on Nan Fung's latest prices, Housing Society development surveyor Peter Or Oi-bon said: 'Of course we will take into consideration their latest price list, we will continue to take note of the market reaction.'
While the society was ready to launch Serenity Place, it wanted to observe market conditions, including buyers' reactions to Nan Fung's prices, before making final decisions on pricing and timing.
According to Deutsche Bank's Mr Lawrence, part of the reason Nan Fung is able to offer such an attractive price is its use, for the last time, of its Letter A and B entitlements.
Such entitlements were issued by the government during the 1960s and early 1980s as part of a rural development plan.
The government resumed land from New Territories farmers and compensated them partly by issuing Letter A or B certificates which could be used in lieu of cash for land transactions or acquisitions. Developers then bought these certificates from the farmers.
'Effectively, the developers were able to buy the land at relatively low prices,' Mr Lawrence said.
Nan Fung's Mr Mak did not expect to see lower prices from other developers, since the lowest-priced Tseung Kwan O Plaza flat - at HK$1,668 a square foot - was already the bottom.
