Sol City sales fall flat as Hong Kong project launches lose their lustre
- The city’s developers increasingly find themselves struggling to shift even half of the units on sale as demand wilts
The era of eager buyers falling over themselves to snap up a home in Hong Kong when a new project is launched may be over, as developers increasingly find themselves struggling to shift even half of the units on sale.
Chinachem City managed to sell 205, or 40 per cent, of the 504 units available at Sol City in Yuen Long by 5pm on Friday, according to market sources. That is a disappointing result for the developer, which had been hoping to sell 70 per cent to 80 per cent.
The flats at Sol City, above Long Ping Station – about 70 per cent of the total – measuring between 322 and 749 square feet were priced from HK$4.81 million to HK$11.92 million, a range of HK$13,389 to HK$17,583 per square foot after discounts.
The price was up to 12 per cent lower than lived-in homes in the area, but that was not enough to win over as many buyers as hoped for.
“Honestly speaking, the location and the price of this project is not bad. If it was put on the market two months ago, it could be sold out on the first day,” said Richard Lee, chief executive at the real estate agency Hong Kong Property. “But under the circumstances, particularly the further plunge of the stock market damaging prospective buyers’ appetite, 200 units [sold] in a day is pretty much the standard.”
The tepid sale is the latest in a string of signs the world’s priciest property market is on the turn, as a stock market rout, rising mortgage rates and the worsening US-China trade war take a toll on demand.
On Thursday, Chuang’s China Investments only managed to sell 63 units – just over a third – at The Esplanade despite offering many units below HK$4 million with the cheapest one priced at HK$2.88 million.
On October 13, Nan Fung sold 96, barely a fifth of the 491 flats offered, in the fourth round of sales at its LP6 project at Lohas Park in Tseung Kwan O, even after discounts of up to 19.5 per cent.
A day earlier, at the One East Coast project at Yau Tong in Kowloon, only a third of the 130 condominium units on offer were bought.
On October 5, China Vanke reported the sale of 181 of 310 flats at its Le Pont development in Tuen Mun.
Agents believe the kind of sell-out sales witnessed just a few weeks ago are unlikely to be seen again this year. Two months ago, all 328 units at Sun Hung Kai Properties’ Park Yoho Milano project in Yuen Long were snapped up by buyers in the first round of sales. In the second round, the following weekend, 112 of 131 units were sold.
Even in the face of such poor responses, the developers are not expected to slow down their efforts to offload stock amid the gloomy market outlook.
“Developers now are trying to put out as many good flats as possible and as soon as possible to compete with each other and get a hold of prospective buyers and to sell as much as possible,” said Sammy Po, chief executive of Midland Realty’s residential department. “As sentiment has turned sour, they cannot count on the second and third round much. Possible buyers may just have bought at other developments.”
The city’s Rating and Valuation Index, which tracks prices of used homes, dropped to 393.9 in August, down 0.3 points from a month earlier, ending a 28-month rally. Citibank, UBS and Nomura have issued warnings that the long uptrend in home prices could grind to a halt and head the other way.
Midland Realty expects overall home prices to retreat by 5 per cent in the fourth quarter this year.