Hong Kong’s first residential project sale of the year released with steep price discounts
- The first batch of flats at The Regent in Tai Po was released on Thursday at an average unit price of HK$12,800 per square foot
- Property developers brace for deluge of supply in coming months that could force further price cuts
Mainland developer China Overseas Land and Investment unveiled aggressive discounts at its new residential flats released in Tai Po on Thursday, in an effort to fend off competition amid rising supply and concerns of a spreading malaise in the city’s housing market.
In the first property sale of the new year, the developer priced the first 324 units at The Regent starting from HK$10,688 (US$1,364) per square foot after discounts.
The average unit price was HK$12,800 per square foot, about 32 per cent lower than a nearby project launched five months ago. The St Martin by Sun Hung Kai Properties, about a five-minute drive away, sold for an average HK$18,698 per square foot in July, shortly before the city’s 28-month bull run in house prices ended.
“Now only a low price can grab attention,” said Thomas Lam, an executive director at Knight Frank.
“Mainland developers tend to want cash as soon as possible. To achieve that, a larger discount seems to be the only way.”
Recent launches in the city have met lacklustre results. One exception was Sino Land’s Grand Central in East Kowloon, which offered new flats at a 14 per cent discount in mid-December, making it the only project to sell out quickly. So far, about 98 per cent of the 1,417 flats offered by the developer have been sold.
Property developers are bracing for a deluge of new supply in the coming months that could force aggressive price cuts to attract buyers. Analysts forecast about 4,279 housing units are set to come on stream in Tai Po in the next few months.
Central Horizon, a Tai Po project featuring 1,408 units by Billion Development and Project Management, has been granted a presale permit. Other Tai Po projects, including Ontolo by Great Eagle Holdings and Mayfair by the Sea 8, a development by Sino Land, have also applied for presale permits.
Despite the discount at The Regent, China Overseas is still believed to enjoy a healthy margin.
Jeffrey Mak, a property analyst at CGS-CIMB Securities, said the costs of developing the project were likely below HK$10,000 per square foot.
He noted that China Overseas bought the site in 2016 for HK$2.13 billion, or HK$1,848 per square foot.
The first batch of units to be released in the 1,620-unit project feature sizes ranging from 377 sq ft to 761 sq ft.
The cheapest unit at The Regent is being offered at HK$4.39 million, while the most expensive will be HK$10.18 million after discounts.
“Definitely a lot of buyers will come to snap up the flats at such a price,” said Mark Fong, an agent at Centaline Property’s branch in Tai Po. “The development has more than 1,000 units. Under the current circumstances, the price has to be cheap to win over buyers.”
Fong said that the price was on a par with 20-year-old second-hand properties in the same area.
A 924 sq ft flat in the nearby Grand Palisades, built in 1997, was sold for HK$13.78 million, or HK$14,628 per square foot on November 29, while another three-bedroom unit in Classical Gardens, built in 1994, is now asking HK$10.79 million, or HK$12,815 per square foot.
Prospective homebuyers are pondering uncertainties over the economy and forecasts that home prices in the city could tumble by up to 25 per cent this year.
The number of property deals, including those for flats, offices and car parks, fell to 3,024 in December last year, a drop of 58 per cent compared to a the previous year, according to data from Midland Realty.