Hong Kong developers to speed up project launches with 12,000 units for sale in coming months

Developers who missed out on the buying frenzy for new flats last Saturday are expected to accelerate their project launches, fuelling a new round of price competition to draw home seekers.

More than 12,000 units in 21 new projects are expected to be available for launch between now and December, pending developer applications for pre-sale consent from the government, according to property agents.

Major projects in the pipeline include Sun Hung Kai Properties (SHKP) 1,050-unit project at West Rail’s Nam Cheong Station, the 983-unit The Pavilia Bay in Tseun Wan, a joint development between New World Development and China Vanke, and Cheung Kong Property’s 970-unit offering at Tsuen Wan West Station.

“Home sales in the first half had slowed because of the market doldrums and dampened buying desire. As sentiment improves, developers will certainly speed up sales in a bid to make up the shortfall in the first half,” said Derek Chan, head of research at property agent Ricacorp Properties.

But he believes developers would be unlikely to mark up prices significantly due to the large supply coming on the market over the next few months.

“Prices for new flats may edge up slightly to test the waters once their projects manage to generate a strong sales outcome in coming months,” he said.

Sammy Po, chief executive at Midland Realty’s residential department, said developers prefer fast asset turnover in order to speed up their land replenishment after the government increased land supply.

“Developers will release new projects once they secure the pre-sale consent even if the launches clash with their rivals,” he said.

More than 1,100 units in three projects worth an estimated HK$8 billion were sold on Saturday and Sunday, compared to 1,633 registered transactions in the primary market for the whole month of August.

China Overseas Land & Investment sold all of the first batch of 300 units at One Kai Tak at the former Kai Tak Airport; Chinachem sold 485 units, or 90 per cent of its 535 flats at The Papillons in Tsueng Kwan O and SHKP sold all of its second batch of 226 flats at Grand Yoho in Yuen Long. The three projects comprised more than 1,000 units put up for sale on Saturday, the largest number of units for sale on one weekend in the past three years.

Prices for additional units at One Kai Tak and The Papillons have been raised by 2 per cent.

On Tuesday, SHKP released the third batch of 113 Grand Yoho units at 2 to 4 per cent higher than the previous batch, while China Overseas put an extra 100 One Kai Tak units up for sale at HK$16,230 per square foot after factoring in as much as a 15.5 per cent discount, and Chinachem released 156 more units at The Papillons.

Joseph Tsang, managing director at international property consultant JLL, attributed the strong sales outcome mainly to developers launching their new projects at competitive prices.

“The latest round of buying fever was stirred up by Grand Yoho which was being offered at attractive prices last month,” he said.

SHKP attracted more than 16,700 potential buyers who signed up for the first batch of 308 units which were offered for HK$12,000 per square foot late last month.

Chinachem then released all 535 units at The Papillons at HK$11,200 per square foot with the cheapest one, a 297 sq ft unit costing just HK$2.99 million, being the lowest price tag in Tseung Kwan O. Meanwhile, prices for One Kai Tak were in line with market expectations, according to Tsang.

“Buying momentum should be sustainable as long as developers release their new projects at competitive prices,” he said.

However, Tsang expressed concern that the financial background of some home buyers might have deteriorated as most of them were attracted to the developers’ mortgage subsidies, tax incentives and discounts. “Given no change in the Hong Kong economy, I’m not as optimistic as the buyers towards the market outlook,” he said.