New World Development lowers sales target by 20pc on cooling measures
Developer's 20 per cent downgrade comes despite plans to launch eight residential projects with 2,805 flats by end of June
New World Development has cut its sales target for this financial year by 20 per cent after the government released a new round of cooling measures in the property market.
It is the second developer to cut its sales forecast, following Sun Hung Kai Properties' announcement last week that it would lower its sales target by 8.5 per cent.
"We previously set our contracted sales target [for the financial year to end-June this year] at HK$14 billion to HK$15 billion. But we decided to cut it to HK$12 billion," said Adrian Cheng Chi-kong, New World's executive director and joint general manager.
"We have achieved more than 50 per cent of our target so far."
Cheng said government's new initiative to soften demand in the property market was "part of the reason" for cutting targets.
"The measures will affect the psychology of flat buyers. It may take two to three months for them to digest the news.
"We saw buyers turn cautious on buying homes and property sales falling after the government introduced a buyer's stamp duty [in late October last year]. The latest measures [released on February 22] are targeting second-home buyers. We would like to be conservative and monitor how home seekers' react to the new measures."
The revised sales target is still 30 per cent higher than the HK$9.2 billion generated from contracted sales in the previous financial year.
New World plans to launch eight new residential projects offering a total of 2,805 flats by the end of this financial year. Its 51-house Park Villa luxury development in Yuen Long will be the first project to be launched and will go on sale this month.
The next project on the market will be another luxury development, The Woodsville, with 236 units, also in Yuen Long.
"We also plan to launch two residential projects at New Eastern Terrace in Tin Hau and Lower Kai Yuen Lane in North Point by the end of 2013. Including the previous eight projects, we will release nearly 4,000 flats for sale in 2013," said Cheng. The cost of the two projects is HK$4 billion.
New World aims to recapture its status as one of the city's three major developers within five years. "We hope to get back to being one of the major developers in terms of public awareness, market capitalisation, and property sales volume," said Cheng.
To achieve that goal it has undertaken several reforms, he added. "We are focused on improving the quality of our products. Our branding and building quality have improved. And we will continue to speed-up property sales.
"We are trying to shorten development time between land acquisition and design and obtaining pre-sale consent," he said.
To attain higher sales volumes New World will continue to acquire prime development sites.
"We plan to convert farm land to residential use with a total gross floor area of one million square feet and replenish a total gross floor area of 500,000 sq ft from old building acquisitions by the end of 2014," Cheng said. "We will also join in the government land bidding," he added.