Presales put on hold as market goes quiet
Developers are expected to delay presales of new residential projects for at least three months because of a subdued market.
Most developers had achieved better than expected sales results this year and were not in a hurry to launch new projects, analysts said. Over the past year, developers have offered new projects at up to 40 per cent above transacted prices in the secondary market, compared with 10 per cent to 20 per cent previously.
Rather than cutting prices to attract sales, developers were offering additional sweeteners, market watchers said.
Matthew Chow, an analyst at China Everbright Research, said developers were not likely to continue their resistance to lowering the asking prices for new flats for much longer. 'They are likely to feel the pressure to adjust their pricing strategies downwards, probably during the Lunar New Year in January,' he said.
By that time, developers would have to be more realistic about pricing products in line with market conditions, Mr Chow said.
Adrian Ngan, head of research at BNP Paribas Peregrine, expected the market correction to continue for three to six months.
'Developers will have to reduce sales prices by 5 per cent to 10 per cent,' he said.
High prices have been achieved in different districts with new flats, especially in the luxury residential sector. Most developers have exceeded their target for this year.
Cheung Kong (Holdings) said it sold 4,000 residential units worth $20 billion in the first 10 months of the year. The company realised more than $11.6 billion from sales in the whole of last year.
According to Centaline Property Agency, Sun Hung Kai Properties made $17 billion from the sale of 2,500 units; Sino Land made $11 billion from 1,100 units; New World Development realised $10 billion from the sale of 2,700 units, and Henderson Land Development sold 1,800 units for $9 billion.
Wong Leung-sing, senior research manager at Centaline Property, said most developers had performed better than last year, mainly because their units were being sold at high prices.
A 5,353-sq-ft penthouse at The Arch in West Kowloon sold for a record $168 million at $31,000 per sq ft.
Projects such as The Legend, built by Cheung Kong, in Jardine's Lookout, and Sino Land's Mount Beacon in Kowloon Tong, were being sold for more than $10,000 per sqft.
