When homebuyers get a free car
Garages include a new electric car as part of latest promotion to boost high-end home sales
What does it tell you when developers give away a car with each purchase of a home?
The obvious answer: competition for customers is getting tough in the face of a cooling market.
In the midst of the property market doldrums in 2002, Hong Kong developers were offering free Mercedes-Benz cars as incentives for buyers.
Flash forward a dozen years to Macau, where, despite steady growth in home prices, Headland Developments announced last week that the villas at its luxury residential development The Fountainside would come with an environmentally friendly BMW i3 electric car.
An additional BMW i3 is being offered as the prize in a draw for owners of all the other units in the development.
There are 20 remaining homes - 14 flats, two duplexes and four villas - for sale in the relaunch of The Fountainside, in Macau's prestigious Penha Hill district.
The first 22 units were offered for sale 21/2 years ago. The selling price for a typical unit ranged between about 4,500 patacas and 4,700 patacas per square foot, Macau media reported.
In the present round, flats will be sold at an average price of between 8,300 patacas and 9,500 patacas per square foot. Special units - the duplexes and the villas - will range between 12,000 patacas and 16,000 patacas per square foot.
Consultancy Jones Lang LaSalle said high-end home prices in Macau rose 31.8 per cent year on year, and prices in the mass-residential and mid-range segments grew 37.5 per cent.
So why would the developer feel the need to offer a free electric car as an incentive?
Sniper Capital, which manages The Fountainside, said the offer was in line with the development's green living focus. Each villa has its own private garage with a charging station for an electric car.
However, a property agent in Macau said sales of luxury units worth HK$30 million or more were relatively slow.
Ronald Cheung, chief executive of Midland Realty's Macau office, said that since the Macau government announced successive measures aimed at cooling housing prices, there had been fewer foreign buyers and the market had been mainly supported by locals, who are less keen to invest a large lump sum in a luxury home.
The measures announced since 2012 include a lower loan-to-value ceiling and an additional 10 per cent buyer's stamp duty that applies to corporate and non-resident buyers.
Meanwhile, the super-rich had options, Cheung said. Several luxury projects are being offered for sale, including Tomson's One Penha Hill.
Cheung said developers of luxury projects would find their buyers, but it would take time. Some developers eager to cash in might follow Hong Kong developers in offering cash rebates on stamp duties to lure foreign buyers, he predicted.
Macau government statistics show there are 11,162 residential transactions in the first 11 months of last year, a plunge of 30 per cent year on year.