Sino Land bets HK$19m on sleepy Peng Chau
For the first time in more than a decade, a residential site on the island of Peng Chau off the northeastern coast of Lantau Island has been bought by a major developer.
But Ray Leung, who owns an apartment with sweeping sea views on the tiny island, does not expect Sino Land's foray to inject new life into the stagnant property market, where prices have consistently lagged Hong Kong Island's.
In 1993, Leung paid HK$800,000 for a 350 sq ft holiday home with a 350 sq ft terrace and a 350 sq ft roof in Nam Wan on the island's southern tip. 'The view is excellent, but not the valuation,' he said. 'And I don't expect that any big names like Sino Land marching into the island will boost prices.' Unlike the static valuation of his holiday home, the value of his 800 sq ft home in Serenade Cove on Castle Peak Road has surged by 74 per cent to HK$4 million since he paid HK$2.3 million for it in 2006.
Sino Land said last week that it had bought a 49,127 sq ft waterfront residential site at Peng Lei Road on Peng Chau for HK$19 million, or HK$516 per square foot. The price tag was 47 per cent below the market expectation of HK$36 million.
Leung said he had been leasing his flat in Peng Chau to a friend for about HK$2,000 a month. 'That is lower than the market rent, as I don't want to let it to someone I don't know.' He has no intention of selling the flat, however, since the price he might obtain would be insufficient to buy another place in Hong Kong with panoramic sea views. 'And it has good fung shui,' Leung said.
An agent at Cheuk Wai Property in Peng Chau said there had been no increase in inquiries from prospective buyers in the area since the news of Sino Land's acquisition.
He said there had been no new supply in the area since 1997.
Peng Chau is dominated by three-storey village houses with floor areas ranging from 350 to 700 square feet, and a handful of privately built housing estates. 'Many village houses are 30 to 40 years old, while the youngest development is 15 years old,' the agent said. 'Property prices here lag behind the rest of Hong Kong.
'Even when compared with other outlying islands such as Lantau, Cheung Chau and Lamma Island, Peng Chau is the slowest in terms of development.'
The agent also said transaction prices in Peng Chau were between HK$2,000 and HK$3,000 per square foot, with prices subject to the quality of the development and location.
Last month, two flats at Monterey Villas in Peng Chau were sold, according to GoHome.com.hk, a property website. A 441 sq ft flat at Monterey Villas was sold for HK$1.2 million, or HK$2,721 per square foot, and a 405 sq ft flat changed hands for HK$900,000, or HK$2,222 per square foot.
The agent said Monterey Villas was first launched for pre-sale at HK$3,000 per square foot in 1997.
As prices in Peng Chau are about half that of housing estates in urban areas and even lower than prices in Shenzhen, the agent said a growing number of retirees had been buying homes on the island.
'As the stronger yuan currency makes the living standard higher in Shenzhen, I see some old people have moved back to Hong Kong recently,' the agent said.
'Their savings definitely cannot afford to buy a home or even a small flat in the city centre. When they visit Peng Chau, they will find flats here to be more affordable. With the environment being quiet and more laid-back, Peng Chau has become an alternative for retirees.'
Patrick Chow Moon-kit, head of research at Ricacorp Properties, said the Peng Chau site was sold for a reasonable price to Sino Land, considering construction costs on the island would be higher than in urban areas and the New Territories.
With construction cost estimated at HK$1,600 per square foot, Chow said the development cost, excluding interest expenses, would be about HK$2,116 per square foot.
The gross floor area, in square foot, of a two-storey residential block surveyors said Sino Land could build on the newly acquired site