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Swire Group

Hong Kong developer Swire Properties withdraws luxury apartments from market amid souring sentiment

Company to hold property as long-term investment

PUBLISHED : Friday, 31 August, 2018, 7:30am
UPDATED : Friday, 31 August, 2018, 10:31am

Hong Kong developer Swire Properties withdrew a luxury serviced apartment development in Quarry Bay from the market on Thursday amid souring sentiment.

The developer said it had reviewed plans for Taikoo Place Apartments, which comprises 111 units ranging from 340 sq ft to 1,140 sq ft in area, and had decided to continue holding the property as a long-term investment.

Taikoo Place Apartments will continue to operate as a serviced residence
Swire Properties

“By retaining the ownership of Taikoo Place Apartments, the company will be afforded greater flexibility and leverage to further enhance the Taikoo Place community in the future. We arrived at a conclusion that holding the building as a long-term asset would be beneficial to our business as a whole,” the company said in a statement. “Taikoo Place Apartments will continue to operate as a serviced residence.”

The company had said in May it was planning to sell the 28-storey building, which was completed in 2014. Luxury apartments were selling for record-breaking prices at the time, and the company did not renew tenants’ leases that expired this year.

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Vincent Cheung Kiu-cho, deputy managing director for Asia valuations and advisory services at Colliers International, said the withdrawal from sale was because of the abrupt change in market sentiment over the past three months. “The developer may not achieve a price as good as it would have several months ago,” he said.

Cheung said the apartments could be priced as high as HK$45,000 per square foot three months ago, but they were unlikely to fetch this price now. Based on his estimate, the whole building, which has a total gross floor area of 75,000 sq ft, could be worth as much as HK$3.4 billion.

Cheung added the property will not attract any government vacancy tax, as Taikoo Place Apartments was not a brand-new building.

A vacancy tax announced in June by Chief Executive Carrie Lam Cheng Yuet-ngor, but which has not yet been introduced, will make completed new homes left vacant for more than six months after the grant of an occupation permit liable to a levy of about 5 per cent of the property’s value.

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Thomas Lam, senior director at Knight Frank, said: “The developer may prefer to hold on to it for leasing until an overall improvement in market sentiment.”

Research by investment banks such as Citibank and UBS and asset managers like CLSA has forecast Hong Kong home prices to tumble by as much as 15 per cent in the next 12 months.

In June, Swire sold office spaces at Cityplaza Three and Cityplaza Four, about 15 minutes’ walk from Taikoo Place Apartments, for HK$15 billion to mainland company Hengilong Investments.