Mainland developers vie for HK market
DESPERATE to recover their investments, developers are rushing to offer mainland property on the Hong Kong market with the aid of expensive television commercials and newspaper advertisements.
In the first three months of the year, 92 mainland developments comprising 16,126 housing units were offered for sale in the territory, according to property consultants Raine Horne and Lau.
Another estimate put the total of flats on sale at 19,779 in the first quarter, representing a 28 per cent increase, compared with the number offered in the same period of last year.
Raine Horne and Lau executive chairman Francis Lau and Jones Lang Wootton director Billy Lo said the developments had been launched in 1992, when the mainland property sector had heated up after Deng Xiaoping's southern tour.
''Many of the developments started at that time are now approaching completion and they can no longer hold the flats,'' Mr Lau said. ''So you see everybody rushing to the market, regardless the response.'' Mr Lo said the relaxation of state control and the standardisation of regulations in 1992 had brought about a surge in the number of new developments.
''It takes some time for a project to go to the market, and the macroeconomic control in the second half of 1993 made some developers further delay their sales activities until now,'' Mr Lo said.
Mr Lau said many developments were being sold because of the difficulty of securing capital under China's credit-tightening policy.
''Some Hong Kong developers are being forced to sell at low prices because their mainland partners are eager to recover their investments,'' he said.
Residential properties outside the main cities, or projects which had just been started, would have difficulty finding buyers.
Mr Lo said the surge in the flats on sale in the first quarter was only the beginning, and that the peak would be experienced towards the middle of this year and was expected to continue into 1995.
''There is a big question mark over whether the market can absorb so many new units in a short time,'' he said.
Self-sufficient design, integrating residential commercial buildings and leisure elements with good location, would be the key to attracting buyers who now had more choice, Mr Lo said.
''There are additional incentives from developers who are offering mortgages for buyers under flexible terms,'' he said.
''So the market should still be good in the first half of this year, but it would be difficult to predict beyond that.''