Hong Kong developers scale back project launches, slow down construction as demand dries up due to coronavirus outbreak

The coronavirus outbreak is telling on Hong Kong’s property market. As the economic downturn dampens appetites for new homes, property developers are adopting a cautious approach, slowing down the construction of new projects and launching fewer new flats.

The building of new homes fell 77 per cent in the first quarter of the year from the previous three-month period to just 900 units, the lowest since the third quarter of 2017, data from the Transport and Housing Bureau shows.

“The entire construction cycle has slowed down,” said Ryan Ip, head of land and housing research at think tank Our Hong Kong Foundation. He added that since the pandemic has hit sentiment, developers will be reworking their strategy, which may include rejigging the progress of their construction schedule and slowing down launches as buyers stay on the sidelines.

Thomas Lam, executive director at Knight Frank, said that a reduced supply of new flats will not necessarily push prices higher as purchasing power will remain depressed in this economic climate.

Signs of buying weakness were on display at Longfor Group and KWG Group’s Upper Riverbank project in Kai Tak on Friday. The partners sold only eight out of 72 flats on offer as of 5.30pm. The flats, ranging from 332 sq ft to 1,072 sq ft, were available at an average price of HK$27,087 (US$3,494.8) per sq ft after a discount of 18 per cent.

Louis Chan, Asia-Pacific vice-chairman and chief executive of Centaline Property Agency’s residential division, said that the poor response to the Upper Bank project was because of the developers’s reluctance to offer sizeable discounts.