Sino Land’s first sale of year gets off to slow start as Hong Kong developer feels backlash after slashing agents’ fees
- The developer cut commission fees to just 1.7 per cent amid a market downturn
- Higher prices of the Kwun Tong project, with flats priced between HK$9 million and HK$25 million, also dimmed buyers’ interest
Hong Kong developer Sino Land’s first property sale of 2019 got off to a lacklustre start, after a dispute with sales agents over commission sapped their motivation amid a market downturn.
The developer had sold just 39 of 118 of its Grand Central flats on offer, priced between HK$9 million (US$1.1 million) and HK$25 million, on Saturday, according to an official statement.
“With the commission rate even lower than that of second-hand flat transactions, sales agents were not the most willing to do their best to promote the project,” said Sammy Po Siu-ming, chief executive of property agency Midland Realty’s residential division.
“This had an impact on the sales result,” he said.
A tender for another 77 flats began on Saturday, and will close on January 31.
Sino Land earlier faced a backlash from property agencies, including Midland, who were upset with the company’s decision to slash commission fees to 1.7 per cent, from the market rate of 2.5 to 3 per cent last week.
The developer made a partial concession after the outcry, and said it would raise commissions to 2 per cent once agents sell more than 40 flats at Grand Central.
Commission fees for secondary home transactions are 2 per cent, Po said.
Property agents will get the promised 2 per cent commission for all Grand Central flats sold because they have helped sell 42 units since the start of 2019, according to Louis Chan Wing-kit, chief executive of Centaline Property Agency’s residential division.
Higher prices of the project located at Kwun Tong in eastern Kowloon also dimmed buyers’ interests, Chan said.
Sino Land raised prices to HK$23,990 to HK$29,969 per square foot, much higher than the average HK$17,388 in for the first batch of units put on the market on December 13, which was a bargain compared with adjacent development projects.
Sino Land has raked in more than HK$1.7 billion (US$2 billion) in revenue after it managed to sell 1,429 flats in five rounds of sales, accounting for 93 per cent of all flats put on the market. The entire Grand Central project has 1,999 units.
“The company is very satisfied with the good sales result,” Victor Tin, associate director of Sino Land, said in the statement.
Ming Tsui, who bought a two-bedroom flat worth more than HK$10 million on Saturday, said she favoured the project because of the good location and convenient transport.
“I don’t think the market will plummet. It will correct by 10 per cent at worst,” said Tsui, who took part in the previous four rounds of sales, but only managed to win the lottery this time.
The decline in Hong Kong’s property market, the least affordable in the world, has picked up speed over the past few months, a result of various factors including rising mortgage rates, worries over the US-China trade war, and a volatile stock market.
Secondary property prices fell 3.3 per cent in November, the sharpest monthly decline in a decade. They have plunged 7.5 per cent since a peak in July.
Sino Land shares jumped 4 per cent on Friday to close at HK$14.28, after Citibank upgraded its rating of the stock.