Big hype, little profit in the Manhattan of HK

When Henderson Land rolled out its CentreStage development for a pre-sale last autumn, its lavish marketing made many promises about the two towers it was building on the western half of Hollywood Road.

A TV ad touted a location in 'the heart of the city', comparing Hong Kong's Central to Manhattan and the City of London. Marketing brochures said the flats would feature oak floors, Varenna kitchen cabinets from Italy and Gaggenau refrigerators from Germany. Above all, the developer promised the building would offer an unpara- lleled experience for Hong Kong residents with a 'western' sensibility, as an advertising executive who put together the campaign said.

For Henderson Land, the advertising blitz was a success. Most of the development's 388 flats were quickly snapped up during the pre-sale at prices averaging more than HK$8,000 per sq ft - breaking previous records for the neighbourhood. And the marketing effort, produced by NC Communications, even earned a finalist nod in an annual ad competition run by Hong Kong's Association of Accredited Advertising Agents.

But some buyers have learned the hard way that there is one thing advertisements for CentreStage could not promise: good timing. The development's pre-sale occurred just before rising interest rates slowed property prices, meaning its owners bought at a peak in the market - and soon discovered how a flashy campaign offers no guarantee of easy profit.

With the building's first flats opening to occupants, transaction and listing data from the secondary market suggests investors who may have once hoped to flip their purchases for a quick gain are now struggling to break even. Dozens of apartments are now listed at prices near or below what their owners paid last September in the pre-sale.

Land Registry filings for the handful of transactions completed in recent months highlight why the building's owners are not demanding higher prices. A 613 sq ft flat on one of CentreStage's middle floors closed at HK$4.93 million last month, even though it went for HK$5.26 million at its pre-sale. Other investors, like one who sold a 540 sq ft flat on a higher floor for HK$5.3 million early last month after paying HK$5.022 million last year, have fared slightly better - but after inflation, brokerage and other fees, they are likely only to break even on their investment.