Developer keeps an eye on quality as more homebuyers go upmarket
Demand for higher-quality homes is on the rise and has driven prices of luxury properties to their highest levels in history.
It's a trend correctly called by Nan Fung Development managing director Donald Choi Wun-hing, who positioned his company to ride the wave of upmarket demand.
Nan Fung diversified into property development from its original mainstream textile business 33 years ago and has since become a key player in the Hong Kong property market.
At first it targeted the entry-level mass market and the higher-level luxury leasing market. But in recent years it has expanded into the mid- to high-end residential markets.
'Hong Kong has become an international city. Buyers are now looking for different products. That's why we invited the internationally acclaimed architect Norman Foster to design our joint-venture project, Providence Bay, on the Tai Po waterfront,' Choi said. 'It is a mid-density residential development and close to the Science Park, which makes it a rare location in Hong Kong.'
Nan Fung plans to launch the luxury project in the second half.
A separate renovation of the Winfield Building in Happy Valley is an example of Nan Fung's plan to set new building standards, Choi said.
The developer paid the Government Property Agency HK$2.1 billion in 2009 for majority ownership of the Winfield Building.
'We are not only renovating the building facade, but also upgrading the water supply, drainage and electricity systems. Also, we will renovate the clubhouse, swimming pool and do extensive landscaping,' Choi said.
It will be Nan Fung's first new launch this year and is scheduled for the third or fourth quarter.
It plans to launch two more projects this year - joint-venture developments in West Kowloon and Aberdeen. The firm will release a total of more than 2,000 flats in 2011.
Choi said he sets high design standards on his projects because of his architecture background.
He cited Queen's Cube in Wan Chai, a joint-venture project with the Urban Renewal Authority. 'The project is close to the heritage-listed Blue House. So we decided to set our building back and design it to fit the neighbourhood.
'We also hoped people might be able to see the Blue House from Queens Road East,' he said.
But the market focused on its low-efficiency rate and high prices when the project was launched last year.
A buyer for the whole building was being sought a few months ago, after only a few flats in the project were sold. 'But the market's turned quiet in recent months - possibly because the project was in the media spotlight,' he said.
Difficulties with the Queen's Cube project didn't stop Nan Fung from buying up more sites for development. It has since teamed up with Wing Tai Properties, buying a residential site in Hung Hom for HK$1.525 billion last week - the fifth most expensive in Kowloon in terms of accommodation value.
Surveyors said a development on the site would need to sell for an average of HK$14,000 to HK$15,000 per square foot in order to generate a reasonable profit. That would mean a further rise in property prices since the highest price at a nearby project is about HK$13,000 per square foot. 'The economies of Hong Kong and nearby cities continue to grow. Wages are going up. The take-up rate in the office market shows companies are expanding.
'Housing and land supply hasn't risen significantly in the last two years, but demand is still strong - especially for flats in urban areas,' Choi said.
Choi's interest in property extends to his life outside the office. He has contributed to several books on the built environment, architecture and urban planning of Hong Kong.
He reads widely - something a South China Morning Post reporter can attest to, having spotted him loading some two dozen books into a trolley at a Tsim Sha Tsui bookstore some years ago.
Choi said he is particularly keen to top up his knowledge of Chinese history and literature. 'I like reading different books. I studied mathematics as an undergraduate and formally trained as an architect,' he said.
'But because I studied overseas, I missed out on a detailed education in Chinese culture so I studied comparative and public history at Chinese University ... then I switched to business studies for my job.
'The mainland is growing fast - we have to understand their culture.'