Wheelock offers 12 per cent discount on new Kai Tak flats to kick life back into Hong Kong’s slumping property sales

The price of HK$24,833 (US$3,167) for the first 112 units at Monaco Marine is 12 per cent below a development sold in the same area last summer
It comes as developers prepare to unleash thousands of flats that will test market demand amid a flagging economy and rising unemployment

Hong Kong property

Sandy Li

Published: 6:30pm, 14 Apr, 2022

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The first large new residential project to be launched in Hong Kong since a ferocious fifth wave of coronavirus struck has been priced more than 10 per cent lower than a development that went on sale in the same area last summer.

It comes as developers prepare to unleash thousands of flats in the coming months that will test market demand amid a flagging economy and rising unemployment.

Wheelock Properties priced the first batch of 112 units at Monaco Marine in Kai Tak, the site of the city’s former international airport, at an average of HK$24,833 (US$3,167) per square foot after factoring in a discount of up to 12 per cent.

The price, unveiled on Thursday, is about 12 per cent lower than the average launch price of HK$28,200 per sq ft at a nearby project, The Henley III, in the same area last August.

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“Developers will take a more conservative approach to pricing to test the market response. Hong Kong’s [economy] is not yet recovered from a serious illness,” said Louis Chan Wing-kit, Centaline Property’s vice-chairman and chief executive, residential, in Asia-Pacific.

The city’s economy is likely to have contracted in the first quarter of this year, Financial Secretary Paul Chan Mo-po said in March, with the jobless rate for the three-month period ending in February rising to 4.5 per cent, its highest level in about five months

Wheelock’s price list was unveiled hours after Chief Executive Carrie Lam Cheng Yuet-ngor announced details of the relaxation of social distancing measures from April 21.

Restaurants will be allowed to operate dine-in services until 10pm with four people per table, gyms, massage parlours, cinemas and theme parks will be able to reopen after more than three months of being shuttered up.

“The competitive launch prices indicates the developer would like to generate sales by volume instead of achieving high prices,” said Sammy Po, chief executive of Midland Realty’s residential division for Hong Kong and Macau.

“ Thousands of new flats are waiting to be put up for presale over the next few months, once the social distancing measures are relaxed. If you do not offer incentives to speed up sales, buyers will be lured away to other projects.”

Developers avoided marketing new projects in the first quarter, as the government banned public gatherings to contain the latest and most virulent wave of Covid-19 to ban public gatherings.

Close to 4,000 new flats are expected to be released for sale in the three months to June, and some developers have already offered incentives to entice buyers.

Henderson Land Development is offering up to HK$100,000 of cash rebates to spur buyers to pay within 120 days of their purchases of leftover flats at The Richmond in West Mid-Levels.

Chevalier International Holdings is waiving the management fee for up to two years for the first 10 buyers of its Sablier project in Tai Kok Tsui. It is also offering an extra 3 per cent discount on some units.

The sweeteners came after Goldman Sachs predicted home prices will fall by 20 per cent between now and 2025 as borrowing costs increase and demand slumps because of rising unemployment.

The American investment bank said every 25 basis-point rate increase would need a 5 per cent increase in income or a 5 per cent decline in property prices to maintain affordability.

The US Federal Reserve has suggested it could lift interest rates six more times, up to a total of 100 basis points, this year.

Hong Kong’s lived-in home prices have dropped 4 per cent from a peak in September last year.

Prices for the first batch of flats at Monaco Marine, with sizes ranging from 326 sq ft to 713 sq ft, were HK$7.96 million to HK$18.95 million, or HK$23,491 per sq ft to HK$26,733 per sq ft.

The 559-unit project takes the form of four residential towers, and is due to be completed in March next year.

“We hope to launch the sales this month. Monaco Marine’s price is the city’s take-off price [for new projects],” said Wheelock Properties managing director Ricky Wong.

Separately on Thursday, MTR Corporation announced the tender for a residential project on top of the Pak Shing Kok ventilation building in Tseung Kwan O has been awarded to New Synergy Limited, a consortium formed by New World Development and China Merchants Land.