Wheelock Properties

Wheelock Properties launches initial batch of flats in Tuen Mun project at close to development cost

Ninety-two units have been released in Wheelock’s Napa in Tuen Mun at prices ranging from HK$9,563 to HK$13,014 per sq ft, not far above the cost of construction and land acquisition, the developer says

PUBLISHED : Thursday, 13 October, 2016, 7:31pm
UPDATED : Thursday, 13 October, 2016, 10:52pm

Wheelock Properties has released its new project Napa in Tuen Mun at a price close to development cost, amid intense competition in the New Territories where a large number of new flats are under development.

The developer on Thursday announced the price list for the first batch of 92 units at an average of HK$10,438 per square foot, after factoring a maximum discount of 18.5 per cent.

“This price is close to our development cost as the construction cost is nearly HK$5,000 per square foot,” said Ricky Wong, managing director of Wheelock Properties.

Wheelock won the site, 88 So Kwun Wat Road near Harrow International School, for HK$1.39 billion, or HK$3,683 per sq ft in January 2013.

Without taking into account interest expenses, the construction and land price have already amounted to HK$8,683 per sq ft.

Thomas Lam, head of valuations and consultancy at Knight Frank, said interest expenses would cost about three to four per cent a year of the value of the loans used to finance the project.

“The launch price is competitive. But developers often launch the first batch at attractive prices to draw buying interest and allow it to increase prices for the following batches,” he said.

“Based on the first releases, it’s hard to draw any conclusions about the profitability of the project, as prices may be different in next round of sale,” he said.

Developer’s profit margins have been cut to 10 per cent plus in the past 10 years, from previously 20 per cent,” Lam said.

The first batch of Napa, with unit sizes ranging from 460 to 830 sq ft, are priced at HK$5.72 million to HK$10.63 million, or HK$11,733 to HK$15,967 per sq ft.

After factoring a maximum of 18.5 per cent discount, prices will reduce to HK$4.75 million to HK$8.67 million, or HK$9,563 to HK$13,014 per sq ft.

The cheapest is a 461 sq ft unit on 1st floor at Block 5 at HK$4.75 million, or HK$10,306 per sq ft after discounts.

Napa’s launch price was similar to properties at The Bloomsway, built by Kerry Properties, which is located in a nearby area.

The first batch of The Bloomsway was offered at HK$10,880 per sq ft in November last year, and gradually increased to HK$12,000 per sq ft after warm responses from buyers.

An owner of a 687 sq ft unit at Avignon, adjacent to Napa, immediately cut her asking price by HK$400,000 to HK$6.3 million after Wheelock’s low price strategy, according to Midland Realty.