Home demand helps developers clear housing stock before Hong Kong slaps vacancy tax on hoarders

Hong Kong’s property buyers braved a downpour to snap up more than a hundred unoccupied apartment units and hundreds of park lots around the city, helping developers clear the unsold stock ahead of a government plan to impose a so-called vacancy tax to deter hoarding.

As many as 119 units across the city, or 68 per cent of the 176 flats put on offer by four developers, were sold on Saturday, according to agents. Wheelock Properties sold all 107 of its parking spaces and 24 motorcycle parking lots at the Monterey complex in Tseung Kwan O for a combined HK$255 million.

In Yuen Long in the New Territories, New World Development sold 25 of the 38 units at Park Villa, recording HK$1.12 billion (US$143 million) in sales, according to the developer.

Unit 29 of Park Villa, measuring 3,844 square feet, was sold to the family of Tse Sui-luen, the founder of the TSL Jewellery chain in the city, for HK$46.55 million, agents said. Tse could not be reached to comment.

The weekend sale at Park Villa, more than five years after occupation permits were issued in 2013, underscored the effectiveness of the government’s tax to force developers to release more housing stock to ease the pent-up demand in the world’s costliest residential market, said lawmaker Kenneth Leung.

“The aim of [residential property] development is to provide Hong Kong people with flats,” Leung said.

At Tsuen Wan West, CK Assets sold both of its unoccupied units at Ocean Supreme, while another 22 of the completed units are still being held and are unavailable for purchase. In Tai Po, K Wah International sold seven of 48 units at the Solaria complex.

An overwhelming response was also reported in Mong Kok, where Henderson Land Development sold 84 of the 88 units of the Cetus Square Mile project.

Hong Kong’s Chief Executive Carrie Lam Cheng Yuet-ngor will announce a vacancy tax by the end of June, part of her administration’s pledge to bring the city’s runaway property prices under control and improve affordability in the world’s costliest urban centre, her financial secretary Paul Chan Mo-po said earlier this week.

The move was designed to exact a financial penalty on developers who hoarded completed apartment unit to sell in phases. Prices can rise by as much as 20 per cent between phases, sometimes within weeks.

“We welcome the imposition of the vacancy tax if it can increase supply,” said Sammy Po, chief executive of the residential division of Midland Realty. “Buyers’ enthusiasm [in properties] hasn’t been affected by the tax.”

Still, the enthusiasm hadn’t been unanimous across the real estate industry, as the city’s Real Estate Developers Association (REDA) said it opposes the tax.

The group, which represents the city’s major developers, argued that there were only 3,000 flats that could be categorised as vacant, instead of the government’s estimate of 9,000 units.

Sun Hung Kai Properties has announced plans to sell the remaining stock in the second phase of its Grand Yoho complex, which was completed last year, in Yuen Long in the second half of this year.