Investors returning to new projects, lured by stamp duty subsidies

New residential projects revive interest from investors attracted by higher rental yields

PUBLISHED : Tuesday, 29 July, 2014, 3:59pm
UPDATED : Wednesday, 30 July, 2014, 3:12am

New residential projects where discounts and subsidies for extra stamp duty are being offered have revived buying interest from investors who stayed on the sidelines after the government introduced a series of measures to rein in runaway home prices.

Hong Kong Ferry released the first batch of 30 flats at its new housing project, Metro 6 in Hung Hom, on Friday at a discount of up to 9.76 per cent, including a 6 per cent subsidy for stamp duty for investors.

The flats, ranging in size from 410 square feet to 423 sq ft, are selling for between HK$6.28 million and HK$7.62 million.

About 60 per cent of the buyers at the project are investors, Midland Realty estimated.

"It is more than the other new projects, where usually 20 per cent of buyers were investors," said Sammy Po Siu-ming, chief executive of Midland's residential department.

The second batch of 30 units will be offered for sale on Wednesday.

Investors have stayed away since banks tightened mortgage lending and the government doubled stamp duties on purchases in February last year.

"The investors were attracted by the high rental yield. Since the rent of the flats could reach HK$40-HK$50 per square foot, the buyer could enjoy a rental yield of 4 per cent," Po said.

Data from the Rating and Valuation Department shows the average rental yield of flats with a saleable area less than 431 sq ft was 3.2 per cent in May, while the average yield of flats with a saleable area over 1,722 sq ft was just 2.2 per cent.

Po said it was easy for buyers to find tenants, because the leasing demand for flats in the urban area was strong.

Property agents said Le Riviera in Shau Kei Wan and small flats at Mont Vert in Tai Po are the new targets of investors.

Investors would choose the flats in Kowloon and Hong Kong Island for leasing
David Chan, Ricacorp Properties

Hip Shing Hong, the developer of Le Riviera, will release the first batch of 30 flats for sale on Saturday. Prices for one- and two-bedroom flats, which range in size from 253 sq ft to 527 sq ft, will be between HK$4.63 million and HK$9.41 million.

Buyers at Le Riviera will enjoy discounts of up to 9 per cent, including subsidies of 3 per cent for extra stamp duty, while 15 per cent discounts are being offered at Mont Vert.

About 140 home seekers had registered to buy the Shau Kei Wan flats by Monday. Po estimated about 30 per cent of them were investors who planned to lease the flats out.

"They are planning to buy the flats to lease them out," he said.

Mont Vert, Cheung Kong (Holding)'s controversial new project, attracted investors' attention because it is the only new project with flats priced at less than HK$2 million.

However, those flats are not available for sale by themselves in the first stage of sales. Buyers would have to buy a three-bedroom flat at the same time.

The developer released 492 flats for sale on Saturday and sold 435 over the weekend.

Only 27 of the 57 studio and three-bedroom flat packages have been sold.

David Chan, a director at Ricacorp Properties, said investors are more active in Kowloon and on Hong Kong Island.

"Investors would choose the flats in Kowloon and Hong Kong Island for leasing because of the active leasing market. Most buyers in the New Territories are end-users," Chan said.