Cheung Kong takes the lead in cutting property prices
All eyes on developer's rivals to see if they will follow its move ahead of expected sales drop
Cheung Kong (Holdings) has cut prices of its Lai Chi Kok residential project, a move that analysts believe could prompt other developers to follow suit.
The developer yesterday announced the launch of 20 units at One West Kowloon, including 16 units which had been launched previously but were unsold.
Selling prices for the 16 units are down between 6.01 per cent and 17.41 per cent , when compared with the previous price list, according to the company.
Executive director Justin Chiu Kwok-hung said the new incentives were equivalent to an average price reduction of more than 11 per cent.
The incentives include a reduction in headline price, and a cash rebate equivalent to 3.75 per cent of the property price, which aims to offset the rising transaction cost triggered by the new doubling of stamp duty.
In late February, the government announced the doubling of stamp duty on all properties above HK$2 million.
"(Cheung Kong) is reacting to the weakened demand due to the tougher measures (recently) introduced by the government," said Adrian Ngan Wai-hung, an analyst at Citic Securities International.
"The move will put pressure on some developers who want to speed up sales of their new projects. The price rising trend for first-hand properties could turn around."
David Ng Ka-chun , head of China and Hong Kong research at Macquarie Capital Securities, believes the Cheung Kongmove is the beginning of developers cutting prices to boost sales.
'We need to wait and see is how Sun Hung Kai Properties prices its new launches," said Ng.
Ng said owners of second-hand units would not follow the trend in the near future because holding costs remained cheap because of low mortgage rates.
Sun Hung Kai Properties' deputy managing director Victor Lui Ting said the company has no plan to cut prices of its developments.