SHKP and Cheung Kong Property locked in Yuen Long price war

Hong Kong’s two largest developers are locked in a price war, with Sun Hung Kai Properties (SHKP) releasing a mass residential project in Yuen Long on Wednesday at prices about 10 per cent below those at a development in the same district by Cheung Kong Property Holdings.

SHKP’s announcement came less than an hour after Cheung Kong said it would release 560 units at Yuccie Square for sale on Sunday.

“It is unavoidable to create direct competition as there is overlap of targeted customers among the two projects,” said Sammy Po, chief executive at Midland Realty’s residential department.

SHKP announced the price list for the first batch of 128 units at Park Vista, located between the West Rail’s Yuen Long Station and Kam Sheung Road Station, at an average price of HK$12,192 per square foot of saleable area.

That is about 10 per cent below Cheung Kong’s HK$13,580 per square foot for the first batch at Yuccie Square when it released last Friday. It has registered more than 5,000 prospective buyers.

Po said potential buyers with limited budgets could opt for the 1,027-unit Park Vista although the location was less convenient than 1,129-unit Yuccie Square, which was close to West Rail’s Long Ping station.

Factoring in discounts of up to 11 per cent, average prices for Park Vista will be HK$10,851 per square foot, about 20 per cent below the going rates for units in Yuen Long town centre. The average discounted price for Yuccie Square is HK$11,950 per square foot, factoring in discounts of as much as 13 per cent.

Louis Chan Wing-kit, the managing director of Centaline Property Agency’s residential department, said developers had been forced to offer units at below secondary transaction prices owing to increased supply, particularly in Yuen Long. The two projects comprises a total of 2,156 units.
“Developers’ low price strategy will definitely give a severe blow to the secondary market. This month, the number of transactions in the secondary market will drop to a 30-year low of 1,300 to 1,500,” he said.

Meanwhile, the estimated land premium for MTR Corp’s ninth phase of the Lohas Park development in Tseung Kwan O was HK$2.85 billion, or HK$2,545 per square foot, according to a source who read the tender document .

That is about 10 per cent lower than the HK$2,830 per square foot premium for the eighth phase which was awarded to Cheung Kong Property last month.

The tender will close on December 28.

MTR Corp said on Monday it had received 19 expressions of interest submissions for phase nine, which will consist of 1,780 units in three towers, with a total area of 1.12 million sq ft.