Developers to sell new commercial projects as sentiment strengthens

Developers are planning to release commercial projects to cash in on improving market sentiment in Hong Kong after strong residential sales in recent months.

The first project to be released this month is Sun Hung Kai Properties' commercial development at 50 Wong Chuk Hang Road in Southern district.

"We will launch the project for sale [this weekend]. The market sentiment has been good recently," said Victor Lui Ting, deputy managing director at SHKP.

"I think the demand for the project will be strong because of the good location."

The 27-storey office building is near the future Wong Chuk Hang MTR station, expected to open in 2016. The developer will sell the building floor by floor. Each floor has a gross area of 5,200 square feet.

SHKP has yet to disclose the list prices.

Property agents said asking prices for the project may be similar to the nearby two-year-old One Island South, where prices ranged between HK$12,000 per square foot and HK$13,000 per square foot. If so, the minimum price at 50 Wong Chuk Hang Road would be over HK$62 million.

Debbie Chiu, assistant sales director at consultancy Midland IC&I, said: "We received enquiries from end-users in the fashion and design industries, as well as investors."

The building is scheduled for completion in October next year, which is close to the scheduled opening of the South Island Line.

Chiu expects rents at the building to reach HK$30 per square foot, offering investors a yield of 3 per cent.

Another project to be released soon is Billion Development's Shek Mun project in Sha Tin, which is scheduled to be presold in the third quarter.

Project planning manager Reggie Lai Yui-chung said an office and retail building at 10 Shing Yip Street in Kwun Tong will also be released for sale when it is completed, as soon as October.

Another office and retail building at 15 Chong Yip Street in the same district will be launched in the fourth quarter or the first quarter of next year.

Lai is confident about sales prospects for the projects, although demand is being curbed by the government's cooling measures.

"The policy of tightened mortgage lending affected the market the most," he said.

For example, when buying a property costing HK$85 million, buyers need to come up with HK$8.5 million more for the down payment if the bank lends 10 per cent less on the mortgage.

"This has dampened buying interest. Many buyers have adopted a wait-and-see attitude since the measures were released in February last year," Lai said.

"It has left only cash-rich buyers in the market. I believe more potential buyers who put their buying plans on hold last year will enter the market this year, because property prices did not fall under the measures."

Lai said the double stamp duty is not a major concern for investors looking for an upside potential of at least 10 per cent of the capital value.