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Hong Kong stamp duty

Developers wary after slow response to One West Kowloon launch

After a slow response by buyers to One West Kowloon, larger projects are likely to be delayed

PUBLISHED : Wednesday, 12 December, 2012, 12:00am
UPDATED : Wednesday, 12 December, 2012, 3:23am

Hong Kong developers are expected to delay launching new projects offering larger and pricier flats in response to the slowdown in sales caused by the latest measures aimed at cooling down the property market.

"Developers will rather try to offer projects that have flats that sell for smaller lump-sum prices," said Patrick Wong Chi-leung, an analyst at BNP Paribas Securities .

The rethink on new releases is expected following a poor response from the market to last week's launch by Cheung Kong of flats in its One West Kowloon in Lai Chi Kok that it priced from above HK$11 million. Sales were slow at the first residential project to release a price list after the government imposed a series of housing restrictions in late October - including a 15 per cent buyer's stamp duty - with only about 40 of the 286 flats on offer sold so far, according to property agents.

"Sales weren't very good mainly because of the large lump sum price," Wong said. He added that pricier flats attracted mainlanders, before the latest measures, as well as local buyers looking to upgrade, and both groups now needed time to re-evaluate their mortgage plans.

"So developers may wait two to three months for the market to accumulate some purchasing power before it offers larger units again," said Wong.

Wong said Sun Hung Kai Properties might choose to launch its Residence 88 project in Yuen Long ahead of its The Wings 11 project in Tseung Kwan O. More than half of the 352 apartments in Residence 88 were two-bedroom, he pointed out, compared with the three- and four-bedroom flats in the 782-unit The Wings II.

Henderson Land Development is set to launch its single-block development High Place in Kai Tak this month at the earliest. The project provides 76 flats sized from 330 square feet.

"I think in the present market environment, developers will tend to launch more single-block or small projects with smaller flats, sized no more than 700 sq ft and priced at HK$6 million or below," said Sammy Po Siu-ming, a director at Midland Realty.

"It's easier to sell about 100 units, than hundreds of flats in a huge project," he said, adding that SHKP had already indicated it would release its Residence 88 project once it obtained the government's pre-sale approval.

Another property agent, who spoke on condition of anonymity, said the slow sales at One West Kowloon would put the brakes on the launch of new projects by developers.

"We haven't seen any signs that developers may respond by cutting prices of new flats, given that both land prices and construction costs are still high."

Home sales in the primary and secondary markets, meanwhile, rebounded slightly from their ultra-low levels last weekend. Around 44 flats were sold in the first-hand market over the period December 8-9, up from 15 units over the previous weekend.

In the secondary market, according to Centaline Property Agency, 22 homes were sold at the weekend in the 10 largest housing estates it tracks, up from nine flats the previous weekend.