Sun Hung Kai Properties

Sun Hung Kai cuts new flat prices again as Hong Kong developers face headwinds

The company is offering the latest batch of units at its Cullinan West II development in Kowloon at 10 per cent below the price of the previous sale

PUBLISHED : Thursday, 16 August, 2018, 8:03am
UPDATED : Thursday, 16 August, 2018, 10:59am

Sun Hung Kai, Hong Kong’s biggest property developer, has cut the prices of homes at one of its projects by as much as 10 per cent, the second time in less than a month it has taken such action in the latest sign that the property market may be cooling down.

The company is offering 119 units at its Cullinan West II development atop Nam Cheong MTR station in Kowloon at an average price of HK$23,893 (US$3,044) per square foot after discounts, about 10 per cent lower than the prices of a previous batch put on sale last December.

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Other developers are likely to follow Sun Hung Kai, analysts said, given a subdued outlook for the market as interest rates rise, the US-China trade war brings uncertainties, stock markets struggle and Hong Kong government measures to cool prices start to bite.

“The overall downbeat sentiment is still taking a toll on the market,” said Derek Chan, head of research at Ricacorp Properties. “Developers are worried that they cannot unload their properties with headwinds ahead.”

Most new residential projects in Hong Kong in the past six months have been priced at higher than those of lived-in homes, and developers have been able to increase prices with each new batch of a project because of strong demand. However those times may be coming to an end.

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The median house price in Hong Kong had risen for 27 consecutive months until July in what is already one of the most expensive cities to own a home. But UBS has predicted prices will tumble as much as 10 per cent from this month to the end of 2019, while Citibank has forecast a 7 per cent fall in the second half of this year.

Meanwhile sales of flats slowed down in July. Data from agency Ricacorp showed 1,740 new homes sales contracts were signed in July, 15 per cent lower than in June. Contracts for lived-in homes numbered 4,040 last month 7 per cent lower than June.

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Developers are also coming under pressure from an upcoming tax on vacant units that the government is planning to bring in as part of its market cooling measures, according to Louis Chan, chief executive of the residential division at agency Centaline.

“The [Cullinan West] price is set to stimulate interest among buyers that has been soured by the uncertainties of late,” Chan said.

Cullinan West II has a total of 1,188 units. Of the 119 on the latest price list, the smallest is 269 square feet and the largest 1,254 square feet. The prices range from HK$6.28 million to HK$33.82 million after discounts, and subscriptions will start on Friday. The prices are also nearly 10 per cent lower than lived-in homes at Sun Hung Kai’s six-year-old Imperial Cullinan project nearby, according to Centaline.

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This is the second time that Sun Hung Kai has cut prices recently. At the end of July, it put 108 units at its Park Yoho Milano development in the northern Yuen Long district on the market at an average price that was 10 per cent lower than those of lived-in homes nearby.