Hong Kong developers offer huge discounts, cut prices to 2018 levels for new project launches to boost sales
- Henderson has priced Henley Park in Kai Tak at an average of HK$21,088 (US$2,694) per square foot after discounts, which an agent says is 15 per cent below market price
- Developers and agencies are even offering sweeteners like mortgage discounts, dining and travel vouchers to exotic destinations like the Maldives to drum up sales
Buyers waiting to enter Hong Kong’s property market could be spoiled for choice as some developers release homes at price levels last seen five years ago, looking to lock in sales before further anticipated increases in interest rates and supply.
Developers are even offering sweeteners like mortgage discounts, dining and travel vouchers to exotic destinations like the Maldives to drum up sales.
Many developers “are rushing to launch at prices close to or even lower than the market price”, said Louis Chan, the Asia-Pacific vice-chairman at Centaline Property Agency. “Ultimately, buyers will benefit.”
While Chan expects the competitive pricing to attract buyers to the new homes market, “second-hand owners have no choice but to take a beating”.
Henderson Land Development on Wednesday said it would offer the first batch of 148 flats in the 740-unit Henley Park in Kai Tak at an average of HK$21,088 (US$2,694) per square foot after discounts. The company, however, has yet to announce a launch date for the sales.
The price is 15 per cent cheaper than leftover stock of new homes in the same district including Henderson’s The Henley, according to Chan.
Hong Kong’s weekend home sale sags amid looming supply
Last week after the Hong Kong Monetary Authority hit pause on rate hikes after several rounds of increases since March 2022, CEO Eddie Yue Wai-man warned that the cycle of rising interest rates was far from over.
Bank of East Asia on Tuesday said it expected lenders to raise the prime rate by 25 basis points next month due to rising Hibor, which rose to 5.1 per cent on Tuesday, the highest level since 2007, and a tight aggregate balance.
As the aggregate balance, or liquidity in the banking system falls, it results in higher funding costs for banks to borrow from other lenders, which they then pass on to their customers. The aggregate balance, meanwhile, has fallen to the lowest since 2008, according to Bloomberg.
“The high interest rate is one of the points we have to address at this moment,” said Thomas Lam, general manager of sales at Henderson, adding that now is the time for buyers to enter the market.
As the economy picks up in the second half, so will the demand, pushing prices higher, he added.
Grand Ming Group on Wednesday priced 30 flats at the 76-unit The Grands in To Kwa Wan at an average discounted price of HK$18,526 per square foot, of which 24 flats are under HK$5 million.
The starting price of HK$3.79 million for a 231 sq ft unit is the lowest for a new project in Kowloon this year and over 10 per cent cheaper than new launches nearby last year, according to Chan.
The developer was concerned about the high interest rates and wanted to offer a competitive price to the buyers, said Shuooky Fung, general manager of sales and marketing, adding that the company “intended to increase the price of the next batch”.
With Hong Kong’s property market reeling, higher rates will dampen mood further
Hip Shing Hong (Holdings) on Tuesday priced the initial batch of 50 units at the 156-unit Oria in Shau Kei Wan at an average of HK$23,042 per square foot after discounts. The price is the lowest for a new project on Hong Kong Island since 2018, according to Centaline’s Chan.
Prices start at HK$4.79 million after discounts for a 221 sq ft unit. Hip Shing Hong said it set the initial prices low to attract buyers and the price of the next batch would be adjusted accordingly.
The Oria’s average price, however, is higher than some lived-in projects completed in the district in recent years.
Meanwhile, developers and agencies are going all out to offload leftover stock.
Swire Properties on Wednesday said it would offer an extra 5 per cent discount for three flats at Eight Star Street in Wan Chai. The discount, however, is only valid from June 25 to July 31.
Mortgage brokers are offering high rebates for Hibor-linked mortgages with a high loan-to-value ratio for the 105-unit Aruna by Chuang’s China Investments in Ap Lei Chau.
Centaline said it would give the first 10 buyers of the project in the medical profession and their families travel vouchers totalling HK$1.28 million.
Midland Realty and Henderson are doling out dining vouchers worth a total of HK$120,000 for the first six buyers of four projects, including The Holborn in Sai Wan Ho.
Hong Kong Property Services said it would give five buyers of The Knightsbridge in Kai Tak travel vouchers for the Maldives totalling some HK$680,000. The project is being developed by a consortium that includes China Overseas and Henderson.
The developers’ marketing offensive comes after new home sales in May sank 38 per cent to a three-month low of 942, according to Ricacorp Properties. The agency, however, expected transactions to rebound to above 1,000 this month.
After home prices fell 15 per cent in 2022, developers continue to cut prices, Centaline’s Chan said, adding it would take time for the economy to recover.
