Sentiment in Hong Kong's primary property market was boosted at the weekend by the release for sale of the Palazzo in Fo Tan. Developers Sino Land and MTR Corp surprised the market by quickly selling more than 800 units at an average of over HK$9,000 per square foot. 'I think the sale result, in terms of price and units sold, in just a few days was very good and it came despite the fact that there will be quite a few new projects in Sha Tin and Ma On Shan in the coming 12 months,' said Dao Heng Securities head of research Eric Yuen Chi-fung. Mr Yuen said the outstanding result was largely driven by investment demand, which in turn was stronger because of low mortgage rates and an overall limited residential supply in the market. 'An investment yield of 4 per cent compared with the 2.5 per cent mortgage rate is very attractive in this low interest rate environment,' he said. BOC International analyst Manfred Ho said the timing of the launch was good since it came amid improving sentiment and a rebound on the stock market. He said the sale reflected strong market demand, but added that it remained to be seen whether overall sentiment in the property market had improved. Riding on the improving sentiment in the primary sector, Cheung Kong (Holdings) and Nan Fung Development plan to pre-sell their residential project, Celestial Heights, in Ho Man Tin this week. Since market attention was focused on The Palazzo, transactions in the primary market were slow over the weekend with about 20 sales realised. Despite growth in the primary market, the secondary market has yet to benefit. Average transaction prices in 50 key housing estates monitored by Ricacorp Property edged up 0.7 per cent. Deals in the resale market edged up 1 per cent to 419 units, from 415 units a week earlier. Industry watchers said the secondary market would grow gradually once positive sentiment is established from strong sales of new projects.
