Hutchison eyes Hong Kong buyers for Beijing project
Prices in the Chaoyang housing district are expected to rise 20pc this year, but analysts warn of risks involved
Hutchison Whampoa Property is hoping to tap capital from Hongkongers with the release of the remaining units of phase one of The Greenwich development in Beijing next week.
But property analysts believe projects in newly developed districts carry investment risks.
'Buying property [in newly developed districts] is like gambling,' said Vincent Luk Fung-siu, general manager of DTZ Debenham Tie Leung in Beijing.
The Greenwich is near East 5th Ring Road in Chaoyang, a newly developed residential district. It comprises flats and duplexes ranging in price from 9,000 yuan to 15,000 yuan per square metre. Phase one has 777 units, more than 450 of which have been sold.
Last year new residential projects were launched in the area, including Star River, Gome Champion City and Swan Bay. Prices ranged from 6,000 yuan to 16,000 yuan per square metre.
Mr Luk said The Greenwich was not as competitive as similar developments in the district.
'Star River, which is close to 4th Ring Road, is asking for 16,000 yuan per square metre inclusive of decorations,' he said.
'This compares with the average of 10,000 yuan per square metre at The Greenwich with no decorations included.'
Taking into account the decor and the location of Star River, which is closer to the central business district, Hutchison's project was at a premium, he said.
But Mr Luk was optimistic about the growth potential of projects at the 4th and 5th Ring roads.
'The residential sites in the area of the 1st and 3rd Ring roads are no longer up for tender or auction under the government's land policy. It is difficult for developers to beef up their land bank with the urban residential sites,' Mr Luk said.
In the past, prices of flats in the vicinity of East 4th and 5th Ring roads were low because of their distance from the central business district.
However, with new residential projects coming on stream, people are taking another look at the area.
The construction of a light rail system further boosted interest in the area. The average price of a flat has risen to about 10,000 yuan per square metre in the past two years, according to DTZ Debenham.
Centaline Property (Beijing) managing director Li Wen-jie said: 'The market in Chaoyang is the most active among districts in Beijing.
'The price of a flat in this district increased by 15 to 20 per cent last year. I expect prices will increase by 20 per cent this year.'
Mr Luk of DTZ said half of Hong Kong buyers bought flats in Beijing for their own use and the other half for investment.
'The successful sale of phase one of The Greenwich could most likely be attributed to the brand name of Hutchison,' he said.
'Buyers face bigger risks investing in immature districts [in Beijing]. Investments would be more secure in projects near traditional residential areas or close to the CBD, [by] developers with good reputations.'