Tax will not hit sales this year, says Kerry
Director believes developer of luxury flats will not be affected by recent 15 per cent stamp duty as most buyers are locals not mainlanders
Kerry Properties' three residential projects this year are unlikely to be hit by the new stamp duty, according to Chu Ip-pui, the executive director of Kerry Real Estate Agency.
Chu's remarks run counter to market perceptions that Kerry Properties is more affected by the levy, given its luxury-sector positioning.
"The projects that we are going to sell this year mainly target local end-user buyers," Chu said. He believes that most buyers are individuals, rather than corporate clients.
From October 27, non-permanent residents and corporate buyers (Hong Kong-registered or foreign-registered) must pay an extra 15 per cent stamp duty on home prices, regardless of their holding period, the government said.
The first Kerry project to go on sale will be a 176-unit development at 9 Yuk Yat Street, To Kwa Wan. It has a total gross floor area of more than 166,000 square feet and its flats range in size from 700 sq ft to 1,600 sq ft.
The development will be scheduled for sale in the first quarter of this year.
Two-thirds of the units offered good sea views, Chu said.
The second project will be a 168-flat development at Hing Hon Road in West Mid-Levels. It is 71 per cent-owned by Kerry Properties and has a total gross area of about 97,000 sq ft.
The third development is a 40-flat luxury development at 1 Ede Road in Kowloon Tong. Wholly owned by Kerry Properties, it will be offered for sale in the third or fourth quarter.
"Only the Ede project - in a traditional luxury area - could be affected by the new measure. But the project is set to be offered for sale by the end of this year and we will know how the market is going by that time," Chu said.
He said the company's previous projects did not have a high percentage of corporate or mainland buyers.
For example, more than 80 per cent of Lions Rise in Wong Tai Sin was bought by Hong Kong individual residents while about 78 per cent of Island Crest in Sai Ying Pun was sold to locals.
According to Bank of America Merrill Lynch, Kerry's projects did not have a high percentage of mainland owners.
Only a small percentage of buyers at a number of key projects in recent years were from the mainland, it said in a research report in November. For instance, 10 per cent of The Altitude in Happy Valley was sold to mainland buyers while at Island Crest it was 20 per cent, Bank of America Merrill Lynch said.
The report predicts Kerry Properties will reap HK$5.77 billion from the three projects.
Commenting on the stamp duty's impact, Chu said about 20 buyers of flats at Lions Rise walked away from their deals after the government announced the measures.
"But we have since resold those flats and only one unit that was in default is unsold," Chu said.
He said the property market would be supported by the low rate of unemployment, which stands at about 3 per cent.
"As incomes rise, the housing market will stabilise this year," he said.
In the face of the present slow market, Chu said some developers with a lot of unsold inventory on their hands might have to consider raising agents' commissions to speed up sales.
"However, we don't have a big land bank and we are under no pressure to sell," he said.
Kerry Properties is part of Kerry Group, the controlling shareholder of the SCMP Group, which publishes the South China Morning Post.