Sale a success, demand still flat
Strong demand for flats in The Coronation in West Kowloon is due, property analysts say, to keen pricing and its proximity to the express railway to Guangzhou now under construction rather than a sea-change in buyer sentiment.
'It is unlikely that the strong sales achieved at The Coronation will extend to other areas,' said Eric Yuen, head of research at Dao Heng Securities. 'The brisk sales we saw there over the New Year holiday period were due to its location and attractive pricing strategy and not a turnaround in sentiment.'
David Chan, director of estate agency Ricacorp, echoed this view. An absence of positive news and the approach of the Lunar New Year, when sales are slow, would keep most potential buyers on the sidelines for the rest of the month, he said.
Sino Land, the leader of the consortium building The Coronation, said that by Monday it had sold 550, or 74 per cent, of the project's 740 flats. They went on sale on December 29. The project will be completed by the end of this year.
Being close to the Hong Kong-Shenzhen-Guangzhou express rail line, slated for completion in 2015, the project had an edge over rivals when it came to attracting investors and mainland buyers, said Yuen.
More importantly, sales were boosted by the consortium's low pricing strategy, which saw the first batch of 50 flats released at an average price of HK$13,688 per square foot, about 9 per cent below the average asking price of HK$15,000 per square foot for flats being resold at the nearby Sorrento housing project, close to Kowloon Station.
Subsequent batches of flats were offered at gradually rising prices, and the sellers have achieved an average price of HK$15,000 per square foot.
Further evidence of this discounting strategy came last week when a consortium led by Sun Hung Kai Properties (SHKP) was forced to lower asking prices for a third time at its 334-unit Chatham Gates development at Hung Hom.
On December 15 the developers published a price list for 51 flats at an average asking price of HK$16,118 per square foot. That compared with secondary-market prices in the area of between HK$5,500 and HK$6,400 per square foot. Poor buyer interest prompted it to withhold the launch of the first batch and instead publish a price list for a second batch at a reduced average price of H$11,972 per square foot.
Once again lacklustre interest prompted it to withhold this second batch from sale and publish a third price list for another batch of flats last week at prices averaging just HK$10,418 per square foot; the cheapest flat in the batch was priced at HK$8,838 per square foot. Thirty-five of the 50 flats in this batch have sold. Batches one and two have not been re-released for sale.
In the secondary market, meanwhile, 110 sales agreements were signed in the 50 housing estates monitored by estate agency Ricacorp in the week from January 1 to 8. This was a 3 per cent increase from the 108 units sold in the previous week.
The average home price, as tracked by The Centa-City Leading Index, was down 1.25 per cent for the week to January 1, the steepest weekly fall since July last year.
Buoyed by the strong response for its flats in West Kowloon, Sino Land said it would continue releasing the remaining flats for sale.