Hong Kong’s homebuyers greet developers’ attempt to sell leftover residential property with their collective cold shoulder

The biggest sales weekend of residential property in almost five months was met with a collective shrug
A total of 152 flats, or 35 per cent of the 435 units on offer by developers, found buyers

Hong Kong property

Lam Ka-sing

Published: 8:42pm, 2 Nov 2019

Why you can trust SCMP

Hong Kong’s biggest sales weekend for residential property in almost five months was met with a collective shrug, as homebuyers mostly ignored the 622 unsold homes left over from previous launches to wait for new projects that are due for release in the coming months.

A total of 152 flats, or 35 per cent of the 435 units offered by five developers, found buyers at 6pm, sales agents said. Another 187 homes were being offered on tender, whose results will only be revealed on Sunday.

“Market sentiment is different [from a year ago], where not selling is the new normal, and the ability to sell is a better-than-expected [outcome],” said CGS-CIMB Securities’ head of Hong Kong and China research Raymond Cheng. The secret behind “previous sales that were successful came down to more reasonable or attractive pricing. If prices are set too aggressively or are higher compared to initial launches, buyers will hesitate,” he said.

A fire started by anti-government protesters on a street in Wan Chai on 2 November 2019. Photo: Felix Wong

The weekend’s dismal sales drew a stark contrast with the sell-out performance reported on Friday by the Grand Ming Group, which sold every one of its 375 flats on offer at The Grand Marine project in Tsing Yi during a fresh launch, a day after several of Hong Kong’s biggest commercial banks cut their lending rates for the first time in 11 years in response to the city’s third cut in interest rates in as many months.

Homebuyers had become more discerning, turning their shoulders on property that were not offered during earlier launches, particularly in areas that had been affected by anti-government protest rallies, agents said.

In Sham Shui Po, the flashpoint of clashes on August 6 between police and radical protesters, CK Asset managed to sell 15 flats, or a mere 13 per cent of the 112 units on offer. In protest-hit Tai Po, China Overseas and Investment sold 98 flats, or 38 per cent of the 259 units on offer. In Shau Kei Wan, the family of the late Lam Woo sold 39 units, or 74 per cent of their One Eighty project.

Other developers came away empty-handed. China Evergrande, whose first Hong Kong project got off to a flying start four days earlier by selling every one of the 167 flats on offer at Emerald City in Tuen Mun, had to close its Admiralty showroom early at 2pm.

Henderson Land Development, owned by the city’s second-richest man, did not find any buyer for its Novum Point project in North Point, or the Eden Manor in Sheung Shui.

“These [homes are all] leftover stock,” said Midland Realty’s residential division chief executive Sammy Po. “For leftover stock, these are already good sales numbers.”

Timing was also bad, as Causeway Bay, Central, Wan Chai and Kowloon again fell to clashes between police and radical protesters with tear gas and water cannons deployed to disperse petrol bomb-throwing protesters. The Wan Chai office of the Chinese state news agency Xinhua was vandalised.

Overseas developers have stepped up their marketing campaign to attract Hong Kong’s property buyers, with at least seven real estate and emigration seminars underway on Saturday to promote homes in Singapore, Malaysia, the UK, Canada and Australia.

Hong Kong’s average home prices fell for the fourth consecutive month in September, dropping 1.8 per cent from a month ago in the fastest decline in nine months, according to the Rating and Valuation Department. The Centa-City Leading Index slipped an extra 1.1 per cent from late September to October 27.

That is weighing on a city that slipped into its first recession in more than a decade, after third-quarter growth declined by a larger-than-expected 3.2 per cent compared with last year. If Hong Kong’s protest violence continues for a year, the city’s 2020 growth could shrink by 5.8 per cent, which would make it the worst contraction since the city’s return to Chinese sovereignty, according to a forecast by the Dutch bank ING.

Bank of America, JPMorgan Chase & Co, Goldman Sachs and Morgan Stanley all slashed the city’s GDP growth to negative territory, to as much as -2.1 per cent, and warned of long-term recession as tourism and retail are hit hard.

Post