Hong Kong's property giants are locked in a price war as measures to cool one of the world's most expensive real estate markets force them to impose steep discounts to hit sales targets, with many turning to the mainland to fill the gap.
Developers such as Cheung Kong, controlled by Li Ka-shing, are even throwing in free car park spaces - which can be worth HK$100,000 or more - to lure buyers at a time when quarterly transactions are at their lowest level since 1996.
Real estate agents have also taken to the streets to urge the government to relax cooling measures that they say could cost them their jobs, although market watchers say the government is unlikely to budge any time soon.
"The government has made it clear that it can't afford the risks of removing the measures," said Thomas Lam, head of research for Greater China at real estate firm Knight Frank.
Combined contracted property sales of the four major developers - Sun Hung Kai Properties (SHKP), Cheung Kong, Henderson Land Development and New World Development - dropped 39 per cent year on year in the first half of the year, according to Phillip Securities, and the latest earnings reports show tightening steps are taking a toll on them.
SHKP joined that list on Thursday, when it posted a deeper-than-expected 14 per cent drop in underlying profit for the 2013 financial year.
The battle to rein in property prices has pitted Chief Executive Leung Chun-ying against tycoons such as Li.
Leung reiterated on Wednesday that the city had no plans to relax recent measures, given the continuing risk of a bubble.
"There are no speculators in the market now due to the tightening measures, so developers are forced to sell properties close to the market price," said research associate director Wong Leung-sing at Centaline Property Agency.
Developers are selling new homes at about a 20 per cent premium over prices in the secondary market, a sharp fall from premiums of 50 to 80 per cent before the latest round of curbs started in October last year, said Lam.
Centaline said in July that the inventory level of residential properties was at its highest in nine years. It predicted there would be about 15,000 new units on sale in the second half of this year, down from nearly 45,000 in the second quarter alone.
With no sign of a relaxation in the city's property policy, developers are now increasing investments in the mainland.
"The policy risk is comparably lower [on the mainland] than in Hong Kong," said Charles Chan, managing director of valuation and professional services at real estate services provider Savills.