Hong Kong developer offers innovative financing scheme for tiny flats to compete in market
Building tiny flats and providing innovative home financing schemes are strategies adopted by a mid-sized developer jostling for a share in Hong Kong’s highly competitive property market.
In August, Kowloon Development came under the spotlight when it released its 1,008-unit Upper East development in Hung Hom for pre-sale, three years ahead of the completion date of August 2018.
The striking thing about the project is that 40 per cent or 400 units have a size of about 200 square feet, the largest number of studio flats in a project.
To maximise profit, the developer came up with a bold design that major developers have not tried: squeeze in 36 flats per floor, compared to 8 units in a standard building.
“Every industry has competition. As a mid-size developer, we have to act promptly to produce products the market needs,” said Terence Yang, general manager at Kowloon Development’s marketing and sales department.
To lift sales, the developer even set an unprecedented financing scheme of providing up to 95 per cent of the home loan without proof of income, prompting other property firms to follow suit.
In just two months, it sold nearly 90 per cent or 900 units. Yang said the firm managed to raise HK$4 billion from the sale of 90 per cent of the 1,008 units at Upper East.
“We sold nearly 900 units at Upper East and more than 50 per cent of the buyers opted for the 95 per cent loan from us,” he said.
Its sales in terms of number even surpassed Sino Land’s 851 units, and close to Henderson Land’s 1,011 units in for the nine months ended this year, Centaline Property Agency data showed.
The firm originally focused in acquiring existing old buildings or assembling sites by buying flats in the private market.
“But the rising stamp duties have increased the acquisition cost and made redevelopments economically non-viable. We have to turn to government tenders,” said Yang.