Cash rebate fails to spark buyers' interest in project

Just one unit at luxury project in Causeway Bay is sold in the first three hours after sales begin

PUBLISHED : Friday, 26 July, 2013, 12:00am
UPDATED : Friday, 26 July, 2013, 3:51am

A luxury residential project in Causeway Bay received a tepid response despite a cash rebate of 3.75 per cent offered by the developer to make up for the extra stamp duty.

Yoo Residence, developed by Couture Homes and ITC Properties, sold a 539 square foot unit for HK$16.41 million, or HK$30,460 per square foot of saleable area, in the first three hours after sales began at noon yesterday, the company said.

The firm released for pre-sale 50 units at yoo Residence, due for completion in June 2015, at an average of HK$33,000 per square foot. Deducting the 3.75 per cent cash rebate, which is equivalent to the additional stamp duty yet to come into effect, the buyer paid HK$15.8 million, or HK$29,317 per square foot.

The proposed new stamp duty for homes worth more than HK$10 million is 7.5 per cent, compared with the current 3.75 per cent. Those buying homes worth more than HK$10 million now would have to retroactively cover the extra when the new rates take effect.

Lily Cheng, a senior district manager at Centaline Property Agency's Wan Chai and Causeway Bay branch, said yoo Residence was the most expensive project to hit the market by per square foot value since the rules on marketing of new flats took effect on April 29.

"Given that these units each cost more than HK$10 million, buyers will take more time to make up their minds. The response to these flats should not be compared with that in the case of mass housing projects that involve small lump sum payments," Cheng said.

Prices for the first batch of 50 flats at the 144-unit yoo Residence, sized between 355 and 539 sqft, range from HK$10.16 million to HK$19.1 million.

Big-ticket property transaction volumes have dropped sharply since February, when the government proposed to double stamp duties.

According to Midland Realty, the number of deals for homes priced above HK$10 million plunged 43.5 per cent to 202 in May from January, the month before the new stamp duty was floated.

Couture Homes, a subsidiary of ITC, said it had sold 37 upper-floor units at an average of HK$35,299 per square foot in saleable area before the rules on new flat sales came into being.

Colliers International expects prices for luxury homes to fall about 10 per cent in the next 12 months and those for the mass market to drop up to 15 per cent. It bases its calculations on the possibility of an increase in interest rates in 2015.