Luxury project plays safe on price

New World Development and Wheelock Properties kicked off sales at the Austin with asking prices at least 9 per cent below market expectations for the luxury project.

"The luxury residential market improved recently after the Cullinan launched for sale," said Benny Yu, a senior sales director at Hong Kong Property in Kowloon. "But the market is still affected by the government's cooling measures. Developers have to offer 'attractive' prices to lure buyers and test the market."

Yu said agents had previously forecast a price for the Austin - with 576 flats - of about HK$26,000 per square foot.

The Austin also offered a stamp duty subsidy to attract buyers - a discount of 7.5 or 8.5 per cent off the price to meet the double stamp duty payable by buyers. Including that subsidy, the developers are offering buyers discounts of up to 20.5 per cent. But they have not offered to subsidise buyer's stamp duty, which targets overseas buyers including mainlanders.

Alfred Lau, a property analyst at Bocom International, said the price was about 9 per cent less than he had expected.

"It shows the developers are targeting strong sales volume in the first stage of sales," Lau said. "The lower asking price is their marketing strategy. They want to create some noise in the market."

He said the developers would raise the prices for remaining units as the investment cost was high. "We estimate their investment cost is about HK$14,000 per square foot in terms of usable area," he said. "They also have to share the profit with MTR Corp. Their profit margin would be less than 20 per cent. They have to raise the prices."

The developers announced the price list of the first batch of flats yesterday, with sizes ranging from 416 to 1,002 sq ft of saleable area. The prices ranged between HK$8.53 million and HK$25.72 million, or HK$19,877 and HK$26,573 per square foot.

Lee Wee Liat, the head of property research at BNP Paribas Securities (Asia), said it was reasonable for the price of the project to be lower than the Cullinan because of its location and flat sizes.

Lee said he believed the developers would raise the asking prices if sales of the first batch of flats were strong.

Meanwhile, the Lands Department yesterday said HKR International secured a Tuen Mun residential site for HK$551 million in a government tender.

Far East Consortium International bought a residential site in Sha Tau Kok for HK$143 million or HK$1,195 per square foot.