Sun Hung Kai Properties is one of Hong Kong’s largest property groups, with revenue of HK$68.4 billion in the 2011-2012 financial year, and profit attributable to shareholders of HK$43.08 billion. The company has been shaken in recent years by disputes between family members, with chairman and chief executive Walter Kwok being forced to step down in a dispute with his brothers Thomas and Raymond. In March, the Independent Commission Against Corruption (ICAC) arrested senior officials as part of a corruption probe that also included former chief secretary Rafael Hui.
Discounts from developer SHKP point to push on cash flow
Lures at Fanling project highlight developers' needs to offer incentives on stock of 2,000 flats for Easter presales amid rush to boost land banks
Sun Hung Kai Properties launched its Mount One residential project in Fanling with significant price concessions and the offer of a one-year bridge loan equivalent to as much as 70 per cent of a flat's value as an added lure for buyers.
"Undoubtedly, developers need to provide an array of incentives and financing schemes to aid buyers looking for bigger units," said Wong Leung-sing, a senior associate research director at Centaline Property Agency.
With an estimated 2,000 units available for presale during the Easter break, developers opted for a fast asset turnover strategy in a bid to raise cash flow to replenish their land bank at a time when land prices are declining. The Easter holiday takes place from April 18 to 21.
SHKP says it offered the first batch of 50 units at 144-unit Mount One with a discount of more than 22 per cent for buyers meeting certain conditions. Units on offer were priced from HK$8,814 to HK$12,897 per square foot on saleable area, about 10 per cent below the recent transaction price of HK$10,000 to HK$11,000 per square foot at the one-year-old Green Code project in the area.
It would also offer discounts of 5 per cent to buyers who paid cash; 3 per cent to those who sign an agreement on or before May 31 and thus are not required to pay extra stamp duties, and 2 per cent to those who are not applying for a second mortgage. A 70 per cent subsidy on stamp duties will be offered for overseas buyers, and those buying on behalf of their companies.
"It is an absolutely attractive price," said Victor Lui Ting, deputy managing director at SHKP.
Agents said that, factoring in the 10 per cent discount, prices would be about HK$8,000 to HK$11,600 per square foot. Given that the units are mostly three to four-bedrooms targeting upgraders, SHKP will also offer a one-year loan worth up to 70 per cent of the purchase price at 1.8 per cent above the Hong Kong interbank offered rate or 2.25 per cent below the prime rate quoted by HSBC's best lending rate.
"The flexible financing scheme will allow upgraders more time to sell their existing properties," said Alfred Lau, a property analyst at Bocom International. Most have been forced to defer home purchases due to increasing difficulties in securing mortgage loans to purchase a second flat, he said.
Centaline Property Agency founder Shih Wing-ching blamed the government's high land-price policy for pushing home prices beyond the reach of most buyers.
"Home prices would have to drop 40 to 50 per cent before they become affordable," Shih said, adding that the govern- ment should consider allocat- ing development sites exclusively for "Hong Kong first-time buyers" rather than introducing extra stamp duties to curb demand.