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Hong Kong Property

Biggest opening sale in six months does the trick as homebuyers swarm to new Tseung Kwan O development

Wheelock sells 85pc of flats at Savannah project, with prices below second-hand homes in area

PUBLISHED : Saturday, 14 May, 2016, 10:52pm
UPDATED : Sunday, 15 May, 2016, 12:45am

Homebuyers yesterday snapped up 85 per cent of 362 flats unveiled at a new development in Tseung Kwan O that were up to 10 per cent cheaper than some second-hand homes in the area.

The first batch of flats at Savannah, developed by Wheelock Properties, were offered with discounts of up to 19.5 per cent in the biggest opening sale of new homes in six months.

The flats ranged from 288 sq ft to 748 sq ft and cost between HK$3.51 million and HK$9.56 million after applying the maximum discounts. That works out at an average of HK$11,680 per square foot – below the going rates in the area for new and even some pre-owned homes, according to property agents.

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While the sale was 11.6 times oversubscribed – making it the most popular project this year – some three- and four-bedroom flats went unsold, said Wheelock, which cashed in HK$1.6 billion.

Sammy Po Siu-ming, chief executive at Midland Realty’s residential department, said: “This shows there is still strong demand for mid-to-small home units. The main factor is whether the prices are attractive enough for prospective buyers.”

Industry experts said it was the lowest price range since tougher rules to regulate sales of new flats were introduced in April 2013.

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Wheelock said it was “very satisfied” and would release 108 more Savannah flats on May 18 at slightly higher average prices.

Steep discounts offered by developers and individual owners helped Hong Kong’s overall property transactions – including flats, shops and industrial units – rebound to 5,613 in March from a 17-year low of 2,583 in February.

“In areas with abundant supply, such as Yuen Long, Tseung Kwan O or the New Territories, I believe developers will release projects at low prices if they want good sales. They probably need to be 10 per cent cheaper than second-hand homes in the same area to ensure good turnout,” Po said.

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At the high end of the market, Henderson Land is trying to entice buyers of its Wellesley flats in Mid-Levels with mortgage loans of up to 95 per cent. The company declined to reveal sales figures for the 20 flats put on the market yesterday.

Louis Chan Wing-kit, managing director of Centaline Property Agency’s residential department, forecast the number of first-hand property transactions in May could rise by 10 per cent from 1,800 in April. “Developers’ price cuts are the main reason,” he said.

Goldman Sachs recently forecast Hong Kong home prices would drop 20 per cent from now to 2018, driven chiefly by a potential 150 to 200 basis point increase in interest rates.