Luxury Tuen Mun homes snapped up despite measures to cool prices

Half of upmarket flats sold at development despite government's property cooling measures

PUBLISHED : Wednesday, 12 September, 2012, 12:00am
UPDATED : Wednesday, 12 September, 2012, 10:04am

Home buyers snapped up nearly 50 per cent of upmarket units offered at a residential project in Tuen Mun in the first six hours yesterday, the first development put on sale since the government rolled out a string of measures last month to bring down home prices.

Sun Hung Kai Properties released 107 units at Century Gateway in Tuen Mun for pre-sale at an average price of more than HK$11,000 per square foot, making it the most expensive flats in the area, or at a level comparable to Taikoo Shing in Quarry Bay.

Prices for Century Gateway were up to double the current HK$5,500 to HK$6,100 per square foot transaction prices in the area, property agents said.

As of 10pm, according to market sources, close to half of the 107 units had been sold and sales continue. More than 900 potential buyers have registered to buy the project.

"The sales do not serve as an indicator for the outlook of the residential market as the prices are too expensive," said David Ng, an analyst at Macquarie Equities Research.

He said SHKP had the ability to price its new projects at a big premium above the secondary transaction market.

However, home-buying sentiment has remained strong despite the government's announcement of a 10-point plan to increase supply on August 30. It released two sites at the Kai Tak Airport site last Thursday where flats will only be sold to permanent residents.

Home prices in the secondary market, as tracked by the Centa-City Leading Index, surged to a high at 107.99 points for the week of August 27 to September 2.

Hong Kong home prices have climbed 14.68 per cent this year as of September 2, and in May they passed the all-time high seen in 1997, according to the index.

Ng is concerned that if home prices continue to rise the government might introduce further measures to cool the overheated property market.

SHKP said it could pull in HK$1.2 billion if all 107 units at Century Gateway were sold. Buyers who conduct business between Hong Kong and the mainland accounted for about 10 per cent while 60 per cent were local residents living in the northwestern New Territories, it added.

The developer expects that Century Gateway, comprising a total of 1,075 units, could achieve an average transaction price of HK$9,000 per square foot, and generate total sales revenue of HK$7.5 billion. Ng said the developer would generate a gross profit margin of about 40 per cent.

The sale came a day before the company's final result announcement today.

Raymond Ngai, an analyst at Bank of America Merrill Lynch, said he expects SHKP to report a core profit of HK$21.3 billion for the year to June.