Sellers in the secondary-home market have been pitched into direct competition with developers, who are luring home seekers to their new flats with discounts of up to 20 per cent on secondary market prices.
Flats in phase two of The Avenue in Wan Chai will be offered for sale from today at an average effective price of HK$18,771 per sq ft,the developers say. The price is about 20 per cent below the prices at which flats nearby are currently changing hands in the secondary market, agents said.
The average list price of the first batch of 220 flats released by co-developers Sino Land, Hopewell Holdings, and the Urban Renewal Authority, is HK$22,753 per sq ft. The flats range from 338 sq ft to 760 sq ft, and unit prices are between HK$7.4 million and HK$17.5 million.
But the developers are offering a 7.5 per cent discount on the list prices to subsidise buyers' stamp duty payments, together with other benefits such as an 8 per cent discount on prices for cash payment within 180 days. Taken together, they could amount to a maximum discount on the list prices of 17.5 per cent, which would reduce the average flat price in the project to HK$18,771 per sq ft.
On Saturday, Nan Fung Development will launch the first batch of 318 flats at its project The Visionary in Tung Chung at prices it says are up to 22 per cent below prevailing secondary market prices in the nearby area. After the discounts the average price of the flats will be HK$7,672 per sq ft.
"Developers are trying to attract buyers from the secondary market by offering discounts and subsidies on stamp duties. The prices will be similar to, or lower than those of secondary-market flats. Then they will gradually raise the asking prices of their remaining flats," said an agent who asked not to be named.
Joe Lee, chief sales manager at Midland Realty, said no deals had been done in the secondary market in Tung Chung since Nan Fung announced it would launch sales of the project. "Since most flat owners will not cut their asking prices by 20 per cent, the secondary market will stay quiet in the next few months," he said.
Clarence Chow, sales director at Ricacorp, said about 30 per cent of buyers at The Avenue planned to buy one- or two-bedroom flats for leasing. Since rents in the area could reach HK$28 per sq ft in terms of usable area they could enjoy a rental yield of about 5 per cent. But other agents cautioned that investors would face strong competition when they released the flats for leasing.
"Many new small flats will be released on Hong Kong Island in the next few years. Rents will be under pressure," said an agent.
Buyers are lining up to make offers on this week's new releases. According to the developers, more than 3,000 had subscribed to buy flats in The Avenue by Tuesday, while The Visionary attracted 1,500 subscribers.