Glut of new units may put pressure on residential market
A new wave of homes is weighing on the residential market, with Sino Land, Kerry Properties, Cheung Kong (Holdings), Hongkong Land and Kowloon Development set to launch their projects for official sale.
Analysts said the 2,130-unit Residence Oasis, a joint venture project between Sino Land and Kerry Properties in Tseung Kwan O, could serve as a barometer for measuring sentiment in the housing market.
Other upcoming residential projects include Hongkong Land's 140-unit Ivy on Belcher's in Western, Cheung Kong's 156-unit Princeton Tower in Sheung Wan, and Kowloon Development's 75-unit La Maison Du Nord in Kennedy Town.
Lehman Brothers property analyst Anthony Wu believed prices in Tseung Kwan O, a typically oversupplied market, would fall under pressure. 'It is difficult to see a big jump in prices there,' he said.
Mr Wu expects the amount of new supply plus the remaining number of units in Tseung Kwan O could reach the 10,000 level in coming years.
His projection of new supply includes Cheung Kong and Nan Fung Development's 2.6 million square foot residential development at Tiu Keng Leng MTR Station, and a consortium formed by New World Development, Chow Tai Fook Enterprises and Singapore businessman Wee Cho Yaw to build a one million sq ft development at Tseung Kwan O MTR Station.
But the other three projects on Hong Kong island should have no trouble enticing buyers as they comprise a total of 371 units.
Jonas Kan, equity research director at Daiwa Institute of Research said the primary market could take up 24,000 units this year, of which 23,000 flats had been sold so far. The market had taken up 26,000 units last year.
'It would be better if transactions in the second-hand market picked up further, as upgrade demand could then be generated. This would help develop a healthier market,' he said.
But he expected activities in the secondary market to slow down this month, considering owners had raised their asking prices by up to 20 per cent.
According to Land Registry figures, 11,219 property transactions were completed last month - the highest number in 31 months - up 63.4 per cent from September.
Strong sales of luxury homes boosted total considerations 131.5 per cent higher than September to $32.1 billion.
Centaline Property Agency director Terence Tong Ping-ching said satisfactory responses had been received for internal sales at some new developments.
'Buying interest is still strong, even if developers offer units at market prices,' he said.
Residence Oasis had sold 175 units, through internal sales at an average of between $2,500 and $3,800 per sq ft. Some units even sold for more than $4,000 per sq ft.
While about 30 units at Ivy on Belcher's had sold ahead of the official launch, the other two projects - Princeton Tower and La Maison Du Nord - had also signed up a list of prospective buyers.
