Hong Kong property

Hong Kong developer Chinachem prices new apartments in New Territories at 12 per cent below older property

First batch of 144 apartments at Sol City start at HK$13,389 per square foot

PUBLISHED : Wednesday, 17 October, 2018, 6:05am
UPDATED : Wednesday, 17 October, 2018, 1:03pm

Hong Kong developer Chinachem Group on Tuesday priced a first batch of units at its Sol City project in the New Territories at up to 12 per cent lower than lived-in homes in the area. The 144 apartments start at HK$13,389 (US$1,708) per square foot.

The units, ranging from 322 sq ft to 690 sq ft, are expected to fetch between HK$4.81 million and HK$11.92 million, or HK$13,389 to HK$17,583 per square foot.

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Developers in Hong Kong, who have made billions by setting runaway home prices, will now need to make concessions to homebuyers in the city, many of whom are staying away in the hope of a further drop in prices – and even pulling out of deals despite the loss of big deposits.

“The selling price [at Sol City] is 20 per cent lower than our expectations,” said Chris Wong, regional director at Centaline Property Agency. He said the pricing was “very conservative” and that he expected the developer will not add much in the following batches, to win over potential buyers.

In September, an 888 sq ft unit at Spectra development – a joint venture between K Wah International and Sino Land – in the same neighbourhood, also atop Long Ping Station, sold for HK$13.58 million, or HK$15,302 per square foot. A 643 sq ft unit at nearby Yuccie Square, which was launched by Cheung Kong Property a year ago, changed hands for HK$9.3 million, or HK$14,463 per square foot.

Buyers are expecting a further decline in prices
Alvin Cheung Chi-wai, associate director, Prudential Brokerage

Chinachem’s new development, which is much closer to the MTR station, has, however, been offered at a lower price. It follows the example of Sun Hung Kai Properties’ Park Yoho Milano development in Yuen Long and its Cullinan West II development atop West Kowloon Station; as well as Vanke Property (Hong Kong)’s Le Pont in Tuen Mun – all these developments have sold for less than lived-in homes in their respective neighbourhoods.

Industry observers have said the market will go from being one dominated by sellers to being dominated by buyers as the trade war, interest rate increases and a slew of cooling measures by the government weigh on the city’s property market.

“Developers are rushing to unload their stock, as they are afraid the market will get even worse,” said Derek Chan, head of research at Ricacorp Properties. “Some projects, which have been priced lower, too have failed to get an enthusiastic reaction among buyers. Other developers will not dare to set prices as aggressively as they did before.”

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A second round of sales at China Vanke’s Le Pont development on October 6 only recorded the sale of a bit more than half of the 310 flats despite these being priced cheaper than apartments at a 30-year-old housing estate nearby. Also, just two weeks after the project was launched, nine buyers cancelled their purchases, forfeiting a total of HK$3 million.

“Buyers are expecting a further decline in prices. That is why those who have already paid are paying extra now to leave the market,” said Alvin Cheung Chi-wai, associate director at Prudential Brokerage. Cheung said he expected a 10-20 per cent drop in home prices in the coming six months.

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Ricacorp Properties said overall home prices will retreat by at least 5 per cent through December compared with the previous quarter, adjusting from its previous 3-5 per cent range.

The city’s Rating and Valuation Index, which tracks prices of used homes, dropped by 0.3 percentage points to 393.9 in August, its first monthly decline in more than two years.