New World Development launches mega Hong Kong project at lower-than-expected prices, as Covid-19, recession weigh on market

First batch of 180 units will be offered at prices ranging from HK$6.3 million to HK$19.9 million each

Poor economic performance, rising unemployment will force developers to price new flats at lower prices: analyst

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New World Development’s The Pavilia Farm residential project atop the Tai Wai MTR station. Photo: Xiaomei Chen

Published: 7:35pm, 9 Oct 2020Updated: 11:04pm, 9 Oct 2020

Hong Kong property company New World Development will offer the first batch of its The Pavilia Farm project in Sha Tin at lower-than-expected prices, as the city’s third coronavirus wave and its worst recession in decades weigh on the property market.

The first batch of 180 units measuring 322 sq ft to 835 sq ft will be offered at prices ranging from HK$16,618 (US$2,144) to HK$23,877 per square foot, or HK$6.3 million to HK$19.9 million, each. These flats will be completed in June 2022. Their prices represent a 16 per cent discount when compared with the first batch of flats at The Garrison, a development three minutes’ walk away launched by developer Far East Consortium International in July 2018. The Garrison was completed in March, 2019.

“Poor economic performance and rising unemployment will definitely force developers to price new flats at lower prices,” said Vincent Cheung, managing director at Vincorn Consulting and Appraisal.

The launch comes at a difficult time for Hong Kong’s economy. The city’s rate of unemployment has not dropped below 6.1 per cent during the three months ending in August, during the third wave, according to the Census and Statistics Department. At the same time, vacancy rates in the city’s Central business district soared to 7.3 per cent, as companies downsized to cut costs. According to CBRE, 7.8 million sq ft of office space sat vacant in Hong Kong in September, the highest since 1999.

Cheung said he expected unemployment to rise to 7 per cent in coming quarter. “We can tell many white-collar workers are worried about their jobs. Those who can still afford to buy, will be price sensitive,” he said.

The price list for the first phase of The Pavilia Farm also comes ahead of a policy address by Hong Kong leader Carrie Lam Cheng Yuet-ngor, who is widely expected to address the city’s housing shortage next Wednesday, potentially increasing flat supply.

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