• Thu
  • Jul 24, 2014
  • Updated: 8:43am
PropertyHong Kong & China

Tai Po sellers refuse to cut flat prices despite fall in land value

PUBLISHED : Friday, 30 May, 2014, 1:10am
UPDATED : Friday, 30 May, 2014, 1:40am
 

Flat owners in Tai Po have refused to cut asking prices after a record low winning bid for a luxury residential site indicated land prices in the area have plunged by nearly half since 2007.

Great Eagle Holdings on Wednesday won the bid for the site in Pak Shek Kok, near the Science Park, for HK$2.412 billion, or HK$3,300 per square foot - at least 46 per cent lower than nearby waterfront sites sold six years ago.

Anthony Man, a district manager at Centaline Property Agency, said most flat owners at Providence Bay in Pak Shek Kok and other luxury housing estates have so far refused to budge.

"There are only 36 flats at Providence Bay available for sale in the secondary market. The owners would have to pay a special stamp duty of up to 20 per cent if they sold their flats now as they bought them within the last three years," he said.

"Previously, when investors were active in the market, they would cut prices right away on any bad news. But it's mostly end-users these days since the curbs were put in place."

Some owners of the 50 flats in the leasing market have, however, cut their asking rents by 3 to 15 per cent, he added.

"Buyers who have bought luxury flats in recent years have to pay a down payment of at least 50 per cent as the government has tightened mortgage rules.

"That makes it easier for those who bought their units in recent years to hold on to their properties. Also, since the interest rates remain low, most flat owners are reluctant to cut their asking prices," Man said.

The only exception is the owner of a house at Beverly Hills, who has cut his asking price by 14.7 per cent to HK$14.5 million.

Man said he expects prices of luxury flats in Tai Po to drop up to 10 per cent this year.

The low tender bid has come as bad news for Sino Land's new project in the area, Mayfair by the Sea I & II. The company bought the site for HK$7,215 per square foot in 2009.

Property analysts said that given market developments the asking price of the new project would now have to be competitive. "As a nearby site sold for only HK$3,300 per square foot, they would have to be careful," an analyst said.

"Most buyers at Providence Bay are mainlanders and local long-term investors. These buyers have kept away from the market since the government initiated the cooling measures in February last year."

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HK-Explorer
No crack will appear. Those waiting to buy new flats should jump in once there is a 5% decrease as it won't go any lower than that.
The government building targets will not be met in the next 10 years. There is not allot of free land and allot in the plan will hit opposition. Property developers are not stupid and are very good at controlling risk. They will not go on a massive building spree again like 1995/1996 as they don't want to loose money. Finally, just look at all the recent news: MTR is behind on projects because not enough manpower and costs skyrocketing. Costs are skyrocketing at the cultural district.
There is little area that will allow costs to come down much.
I think by 2020 house prices will be 30% higher than today. Reason if HK for some magical reason does meet the targets in 2020 everyone will realise there is no land left. If they don't meet the targets there won't be enough houses to meet demand.
Interest rates won't have much impact on home prices. Most homes are paid off and down payments are so high that default will remain 0% in HK forever thus no risk at all to banks thus no default premiums / insurance.
sipsip1238
Thank goodness there are idiots like you to go long while market insiders exit.
Read through all the articles that preceded all previous pricing crisis, and the trend and commentary is almost identical.
Markets always repeats itself, there doesn't have to be certain reasons, events that no one can think of will suddenly appear out of no where, that's what makes the market so interesting.
HK_eh!
of course no one will lower price now, who writes these articels anyways? or better yet, who approves these articles with limited content.
HK owners are like lemmings, no one wants to be the 1st, but once the dam breaks, there will be a flood of sellers trying to get out at the same time.
What else is new? Just wait for the crack to appear.
whoaman
Should've built public housing there.
impala
I have seen these flats and the development. There are nice on the inside, and it not a bad development by Hong Kong standards. But in the end, there are three things that really matter when determining property value: location, location and location.

These are on the outskirts of Tai Po, sandwiched in between a noisy major highway and an ugly waterfront. Sure, you get a sea view with some of the flats, but you also don't get any shops to speak of nearby, let alone anything resembling a proper restaurant or other facilities. MTR is nowhere to be found - you will be entirely dependent on car transport, and even then getting to HK Island is at least a 30 minute drive.

Taking all of this into consideration, the current prices of HKD 30~35m for about 2000 sq ft are ludicrous. Owners will have to cut by at least 30-40% for this to become remotely attractive again. The sooner they realise that, the better.
HK-Explorer
The facilities will come (still allot of building going on). Environment is nice. I thought of buying there before and liked it enough but ended up buying a place in the city instead.
robkemp
End users don't really care about land-sales, and the speculators left years ago. No one looking to sell anymore as even trading up is too risky because of the double stamp duty. Also no one knows what the market price is as there is no liquidity.
 
 
 
 
 

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