Luxury flats still a big draw for developers
Despite cooling measures hitting demand, big profit margins mean construction of high-end flats is still popular among some developers
Higher profit margins are encouraging some developers to continue to build luxury flats even though the high-end residential market has been hardest hit by the government's market-cooling measures.
"The profit margin of our luxury project The Hampton, in Happy Valley [released for sale in 2011] reached 100 per cent," said Jimmy Fong Man-bun, managing director of CSI Properties' residential arm Couture Homes. "We only had 11 flats. But we generated HK$1.1 billion in sales."
Most buyers in the luxury residential market are mainlanders and investors. But the introduction of stamp duty for non-permanent residents discouraged mainland buyers, while double stamp duty and tighter lending saw investors lose interest.
Data from Centaline Property shows that only 184 new and second-hand luxury flats (worth at least HK$12 million) were sold in August, down 63 per cent from the 500 deals recorded in February, before the government introduced cooling measures.
The total transaction value of the flats sold in August was 45 per cent less than in February.
Due to poor market sentiment, Sun Hung Kai Properties and K Wah International have announced they will build more mass residential flats.
But many mid-sized developers are still interested in luxury residential projects.