Four hours at SHK’s sell-out flats show developers they can keep Hong Kong’s home prices high
Four hours. That’s all it took for Sun Hung Kai Properties to sell all but one of the 45 units at its Victoria Harbour apartment project in North Point on Sunday for a total sales value estimated at HK$600 million (US$76 million).
A corporate buyer, who remains unidentified, even put down HK$87.5 million for six units - including two studios - at the five-tower complex, according to sales agents.
Combined with sold-out responses at two other projects a day earlier, this past weekend was a success for Hong Kong’s developers, as buyers braved a tropical downpour to snap up 96 per cent of the 325 units - ranging from 201-sq ft (18.7 metres) studio units to luxury apartments of 524 sq ft - on offer in three of the city’s neighbourhoods.
“Buyers are fearful that home prices will increase further tomorrow, if they don’t buy today,” said Colliers International’s deputy managing director Vincent Cheung Kiu-cho.
The overwhelming response for Sun Hung Kai and Far East Consortium signals to other developers that housing demand in the world’s costliest residential market remains strong enough for them to justify raising prices. It also underscores the challenges faced by Chief Executive Carrie Lam Cheng Yuet-ngor as she tackles Hong Kong’s property bubble to make housing affordable to first-time buyers.
Median home prices have risen for 26 consecutive months in the city, showing no signs of slowing. Prices, which increased 14 per cent last year, may rise by another 10 per cent to 15 per cent in 2018, agents said.
“As several new projects have already drawn enthusiastic response, developers are unlikely to lower their prices in their forthcoming sale launches,” said Sammy Po, chief executive of Midland Realty’s residential department.
The strong demand is good news for Sun Hung Kai, which has the biggest hoard of completed residential units that haven’t been launched for sale, estimated at 1,000 units. A vacancy tax that was announced on June 29 would impose a financial penalty on developers that don’t put their completed units up for sale, in a government move to pry open the supply bottlenecks to ease the city’s price pressure.
To attract buyers, Sun Hung Kai had offered monetary subsidies to offset a stamp duty ranging from 15 per cent to 30 per cent of the property’s sticker price.
Sun Hung Kai has sold about 68 units at Victoria Harbour since its launch in December 2017, or 19 per cent of the total available units at the soon-to-be completed project.
“Fifty per cent of the buyers of Victoria Harbour are investors, while the other half are owner-occupiers,” a higher proportion than the 30 per cent ratio in other residential projects, said Midland’s Po, adding that one in five buyers there are likely to be mainland Chinese.
The government has also been offering subsidies for first-time buyers and low-income households to afford public housing, answering a plea for help by city residents desperate to afford owning residential property.
On Saturday, Far East Consortium sold 106 of the 112 units on offer at The Garrison apartment complex in Sha Tin, while Sun Hung Kai sold 165 units of the second phase of its St Martin project in Tai Po.
Units at ST Martin, with measurements of between 284 square feet and 837 sq ft, were offered at HK$6.01 million to HK$20.2 million. The 640-unit project in Pak Shek Kok, where more than 3,200 new flats will be ready for sale in the coming months, is due for completion in July 2020.
Flats at The Garrison, with sizes ranging from 201 sq ft to 296 sq ft, were being launched at HK$4.69 million to HK$7.09 million. The estimated completion date for the 118-unit The Garrison is scheduled for March 2019
Sun Hung Kai will retain the 140 units at Tower 6 at Victoria Harbour for leasing., the developer’s deputy managing director Victor Lui Ting said.
Sun Hung Kai will release another 36 units at Victoria Harbour for sale at an average discounted price of HK$40,466 per sq ft, about 10 per cent higher than previous launch last week.
Taking into account the HK$1.5 billion raised from selling 168 units at St Martin on Saturday, the developer has generated a combined HK$2.1 billion in revenue over the weekend.