Launch of latest Hong Kong tiny flats fails to draw long queues ahead of US interest rate decision

Prospective buyers jostled for a batch of tiny Hong Kong flats put up for sale on Tuesday, ahead of a two day meeting by the US Federal Reserve to discuss a possible interest rate increase, but fewer than expected people turned out.

Henderson Land Development’s first batch of 30 units at One Prestige in North Point has so far registered 242 prospective buyers since the sale kicked off at 7pm on Tuesday.

A unit on the fifth floor measuring only 163 square feet in size, the tiniest flat in Hong Kong Island, was sold for HK$3.87 million.

“Buying desire is becoming less enthusiastic than previous project launches. It may because of the high prices,” said Sammy Po, chief executive at Midland Realty’s residential department.

Centaline Property Agency said about 70 per cent of buyers were investors, with one buying up three units for a total of HK$11.5 million.

Click here to view the 360-degree photos of tiny Hong Kong flats

By 8.40pm Tuesday, 24 of the 30 units had found buyers, according to sources. That compares to most recent new launches since August that have seen all available units sell out.

The slower than expected sales come ahead of a decision by the US Federal Reserve on Thursday (Hong Kong time) on whether to raise interest rates.

Units at One Prestige range in size from 163 sq ft to 170 sq ft, and cost between HK$3.87 million and HK$4.78 million – an average of HK$25,248 per square foot. After factoring in a maximum 5 per cent discount, the average price is HK$24,000 per square foot. One Prestige, due to be competed in January 2018, comprises 128 units.

Meanwhile, Lai Sun Development on Tuesday announced it would postpone the sale of its joint venture housing project at 93 Pau Chung Street in Ma Tau Kok, To Kau Wan, to October 1, instead of this coming weekend.

But the company rejected suggestions that the postponement was due to a tepid response.

“We have more than 300 potential buyers who signed up. The initial response is not bad,” said a company spokesman.

Lai Sun is offering 118 units for sale, the cheapest being a 316 sq ft flat costing HK$4.6 million after factoring in a 12 per cent discount.

The initial feedback was less enthusiastic compared with previous projects which drew tremendous interest from would-be-buyers. Sun Hung Kai Properties registered more than 16,700 potential buyers for the first batch of 226 flats at Grand Yoho in Yuen Long three weeks ago.

Separately, CLSA on Tuesday predicted Hong Kong home prices would drop 7 per cent this year to absorb the city’s rising property supply.

The decline would continue in 2017 with an additional 7 per cent decrease, a necessary response to the “slow motion train wreck” of the property market, Nicole Wong, regional head of property research at CLSA, said at the group’s annual investor’s forum.

Coupled with the increasing supply of property, the downturn in the city’s GDP will bring prices “definitely back down,” even as Hong Kong sees growth in its population and household size, according to Wong.

“Even if you’ve got more people, if you haven’t got the money, then the desire for more properties won’t materialise,” she said.

The city’s properties are attractive to mainland investors because they provide a US dollar asset, as well as a larger gross profit margin, she added.

“Hong Kong properties are expensive, so every Hong Kong project is equivalent to 10 Chinese projects,” Wong said. “They can make 10 times as much money.”