Hong Kong developers offer incentives to boost luxury home sales as market cools

More Hong Kong property developers are jumping in with incentives for buyers, with discounts, longer payment terms or offers to absorb a 15 per cent stamp duty, in order to attract buyers and sustain transactions that are in danger of drying up.

Sun Hung Kai Properties has cut prices for two duplex units at its development in Tuen Mun by 13 per cent, the first developer to offer further discounts since the government raised the stamp duty on November 5.

The price for a 1,640 square foot duplex unit, Flat D on the 42nd and 43rd floor, in Block 3 at Century Gateway phase one development has been reduced to HK$38.48 million from original HK$44.23 million, according to a government website.

The reduced price represents HK$23,464 per sq ft. The unit comes with a 1,011 sq ft flat roof and 152 sq ft roof.

Meanwhile, the price of another 1,283 sq ft duplex unit, Flat D on the 41st and 42nd floor in Block 2, has been cut to HK$37.35 million, from HK$42.73 million.

On top of the latest price cut, buyers can take advantage of an existing discount of as much as 10.5 per cent.

The price cut comes in the wake of comments Thursday by US Federal Reserve Chair Janet Yellen, who signalled on an interest-rate hike could be imminent.

“Price cuts will likely be seen in non-traditional luxury areas,”said Thomas Lam, head of valuations and consultancy at Knight Frank.

Separately, Tai Cheung Holdings said it would foot the bill for buyers who are liable for a 15 per cent stamp duty on its luxury development at 3 Plunkett’s Road, on The Peak. Among the remaining five villas still available for sale, the most expensive is a 4,850 sq ft villa which is offered for HK$457.6 million.

The tax relief will help the buyer save as much as HK$68 million.

The Lands Department said it has received eight bids for a large commercial site in Kai Tak, home to the decommissioned Hong Kong International Airport, which could fetch as much as HK$8.8 billion.

Sun Hung Kai Properties, Wheelock & Co, Cheung Kong Property, China Overseas Land & Investment, Wing Tai Properties are among the developers to have submitted bids before the tender closed at noon on Friday.

Other bidders including Sino Land formed a joint venture with Shimao Property and New World Development.

“The initial response appears dominated by Hong Kong developers. It showed mainland players preferred to buy existing office buildings,” said Vincent Cheung Kiu-cho, executive director of valuation and advisory services Asia at Colliers International.

The plot, known as Kai Tak Area 1E Site 2, will yield a total gross area of 1.09 million square feet.

Lam said the proposed development requires strong financing as the project would incur a total development cost of HK$15 billion.

“As the project will likely for be renting instead of selling, it will take the winning developer a longer time to recoup the investment,” said Lam. “For such huge investment, the response of the tender is quite good.”