Kowloon Tong launches to provide insight into appetite for luxury homes

New property releases this week in Kowloon Tong, including a HK$194 million dollar home, will provide an important gauge of demand among the ultra rich at a time when the broader housing market is cooling, according to analysts.

Three triple-storey houses and four duplexes at luxury development Eden Gate in Kowloon Tong, were put up for tender on Tuesday.

The move indicated demand in the luxury market as developers usually only offer their properties for tender if they already have offers from several potential buyers, according to Alfred Lau, a property analyst at Bocom International.

“The developers have already tested the waters, so they’re not too worried,” said Lau.

But La Villa De La Salle, a project with four luxury houses in the same area, remain unsold despite having already slashed prices.

The two property developments are the only ones offering brand new villas for sale in Kowloon Tong.

Lau attributes the divergence in sales response between the two properties to difference in sizes, and as buyers become more price sensitive in a property market downturn.

“The ticket size also matters, it’s a difference of about HK$200 to HK$300 million. [Demand for] luxury homes are still not yet all across the board exciting,” said Lau.

The saleable area of the homes at La Villa De La Salle range from 7,000 square feet to 10,945 square feet, while homes at Eden Gate’s are around 3,000 square feet.

Kowloon Tong, an upmarket, low-density residential area scattered with villas and townhouses, has long been popular among affluent buyers given its proximity to many prestigious schools.

Chinachem Group, the property developer for Eden Gate said it would be expecting a price of at least HK$60,000 per square foot for the houses and HK$50,000 per square foot for the duplexes and insisted on standing firm on prices.

“We will not lower the prices even though property prices are dropping. We will not adjust to market conditions. These are premium lots and high quality units and we do not want to sell them for less than what they are worth,” said Ng Shung-mo, director of sales at Chinachem Group.

Five other units, out of the building’s total of 47, have been sold since May, he added.

“Recently, there is too much supply for small-sized flats, [falling prices] are just a natural consequence because there are more choices. But for luxury houses, or bigger flats, there is less supply and still a demand there,” Ng said.

The lowest priced unit at Eden Gate has an asking price of HK$170.8 million, while the top-end property is listed at HK$194.5 million.

But a property downturn that has seen housing prices fall by 13 per cent since its peak in September has already put pressure on a number of premium developments to cut prices.

The four houses at La Villa De La Salle, which have been on the market since April last year remained empty, even after it marked prices down by up to 10 per cent to HK$45,380 per square foot for a 7,338 square foot house in November.

The most expensive house at La Villa De La Salle is priced at HK$495 million, while the cheapest is HK$318 million according to a listing on the developer’s website.

Recently, a luxury home at the peak expected to become a billion dollar sale, sold well below its expectations at HK$830 million. Swire Properties also gave a 20 per cent discount on its premium residential apartment projects in Mid-Levels to attract buyers.

“[The support in the luxury market] has largely been driven by price cuts,” said Lau. “But to be fair, sentiment for luxury houses have improved.”

The number of transactions for properties above HK$100 million in the first quarter remained stable year on year as sales volumes in the mass market continued to shrink across the board, according to data from Midland Realty.

“Appetite for luxury homes are very specific...and independent to market conditions,” said Lau.

“Since high end properties are tied to investment sentiment and stock market performance, a recent rebound in the previous one to two months may improve sentiment.”