While cash is 'king' for a property sector mired in slumping prices and a worsening economic downturn, Hong Kong developers are stuck with thousands of flats on their books they cannot sell, property analysts say. They say the developers' inability to sell stock has much to do with their unwillingness to undercut prices to attract buyers in fear of creating a snowball effect that will collapse property prices. Merrill Lynch vice-president and property analyst Carol Lai said some developers would try to lure buyers with incentives and sweeteners rather than straight price discounting. 'They would rather offer waivers on flats - like paying legal fees, offering free car parks, etc - that amount to de facto price cuts,' she said. If they were to resort to price cuts, developers would run the risk of creating a snowball effect on prices, undermining the entire property market and affecting the value of their investment portfolios and projects in the pipeline. 'Their margins are being squeezed, maybe 20 per cent to 25 per cent on certain projects, but it just can't be helped in this market,' she said. Ms Lai said if developers had the financial clout, it would be better for them to hold off for a better time to sell. Sung Hung Kai Properties (SHKP) has listed units at Poseidon Coast in Tuen Mun at $4,300 per square foot, compared with an average of $3,000 per sq ft in similar, secondary market developments nearby. The company's only concessions to the slide in prices have been sweeteners such as free legal fees. Poseidon Coast is not due for completion until mid-1999, while some developments are almost completed, which suggests there should be a greater urgency to sell. Centaline's Yuen Long district sales manager Perry Fong said Cheung Kong's Maywood Court development in Kingswood Villas had not recorded any sales transactions since the end of February. Maywood Court is scheduled to be completed this month. 'We see about 1,600 sales transactions from Maywood Court registered with the Land Registry [out of a total 2,264 units],' he said. Mr Fong said the developer's hands were tied because of the staggered payment plan that was offered to buyers last year. 'These people only had to pay 10 per cent as a first payment so, consequently, may not have paid the entire 30 per cent down-payment yet,' he said. With area prices having fallen more than 40 per cent from the peak, there was a danger that further cuts could encourage many original buyers to default. While Cheung Kong had been willing to cut Maywood Court prices from $5,000 per sq ft to $4,200 per sq ft in its latest release in February, the prices remained much higher than the average secondary market price of $3,000 per sq ft. Agents estimated Cheung Kong's Deerhill Bay development in Tai Po, which should be ready for occupation in September, had sold only 100 of its total 381 units. Cheung Kong has been holding a steady line there, listing flats at $9,500 per sq ft compared with an average secondary market price in the area of about $7,000 per sq ft. 'Some clients tried offers in the region of 15 per cent to 30 per cent off the list price but the developer would not accept it,' Centaline Tai Po area sales manager Alfred Cheung said.