Subsidies forcing developers into price competition on new flats

PUBLISHED : Wednesday, 05 December, 2012, 12:00am
UPDATED : Wednesday, 05 December, 2012, 4:15am

Sun Hung Kai Properties' Residence 88, Henderson Land's High Point, and Nan Fung's Tung Chung project may be competing with government-subsidised flats for buyers in coming months.

Together with Henderson Land and New World's The Reach, which is currently on offer, these residential projects have been tipped to offer some smaller flats at prices starting from HK$3 million, fitting the budget of subsidised-flat candidates, say property analysts.

SHKP's Residence 88 is a two-tower development at 88 Fung Cheung Road in Yuen Long with 352 flats ranging in size from 600 to 1,200 square feet.

Since new flats in the neighbourhood are selling for between HK$6,000 and nearly HK$8,000 per square foot, prices for the flats are likely to start at around HK$4 million. The developer is waiting for the government's pre-sale consent before it can sell the flats.

Another project in the pipeline is Henderson Land's single-block project High Point at 188 Tai Po Road in Cheung Sha Wan. As its 138 flats are as small as 370 square feet, the prices should be relatively low.

A property agent, who asked not to be identified, said Henderson Land had earlier listed the flats there for sale at HK$8,000 to HK$9,000 per square foot, meaning the cheapest flat would cost more than HK$3 million. The agent said the developer later withdrew the price list and might delay the launch.

Nan Fung's nine-block residential project in Area55B in Tung Chung will offer one block comprising only one-bedroom flats, targeting first-time homebuyers. Nan Fung earlier announced that the project would be launched in the first half of next year.

The Reach in Yuen Long, where flats are currently on offer, is also pitched at low-budget buyers. About 80 per cent of its 2,580 flats are between 490 square feet and 600 square feet. The flats are priced from around HK$3.4 million to over HK$7 million, and over 400 have been sold.

Alfred Lau, a property analyst at Bocom International, the investment banking unit of the Bank of Communications, said the launch of the Housing Society's Greenview Villa in Tsing Yi, and the loosening of eligibility requirements for Home Ownership Scheme flats, might cause some buyers to turn away from the private market. However, the impact would be marginal.

"Rising salaries and abundant liquidity in the market means there are many people who want to become home owners," Lau said. In addition, the supply of subsidised flats was small and far from sufficient to satisfy demand.