Hong Kong property set to become ‘buyer’s market’ in the first quarter
New home prices likely to drop as property developers jostle to lure buyers
Competition among developers in Hong Kong is set to pick up with as many as 5,000 new flats ready for launch in the first quarter of 2017.
Sun Hung Kai Properties (SHKP) and China Overseas Land & Investment (Coli) are expected to kick off the sale of their new projects in Yuen Long and Kai Tak area with a combined 1,450 units shortly.
“Developers will accelerate their flat sales this year. They had deferred the marketing of new project launches after the government suddenly raised the stamp duty in November last year,” said Derek Chan, head of research at Ricacorp Properties.
With ample new supply this year, he expects developers’ pricing will be competitive in selective areas in a bid to speed up sales.
Coli released the sale brochures of its 624-unit One Kai Tak phase two development in Kai Tak on Monday, three days after Sun Hung Kai Properties, the city’s largest developer, opened show flats at its 826-unit Grand Yoho phase two development in Yuen Long for media viewing.
“Developers are certainly facing pressure on their pricing strategies, especially in areas with various new projects ready for sale,” he said.
Competition for potential buyers is set to intensify in Tsuen Wan, Kai Tak area and Kau To Shan in Sha Tin which are major sources of new supply this year, he said.
In Tsuen Wan, three projects totalling 2,906 units are pending pre-sale. Both Cheung Kong Property’s 970-unit The Ocean Pride and Chinachem Group’s 953-unit in a yet-to-be-named development are located adjacent to the West Rail’s Tsuen Wan West station.
Also in Tsuen Wan is the 983-unit The Pavilia Bay, a joint venture between New World Development and Vanke Property (Overseas).
In Kai Tak, the 900-unit K City by K Wah International has secured pre-sale consent and is ready for launch.
In Kau To Shan, there are five projects with a total of 500 units pending approval of pre-sale consent.
Meanwhile, other upcoming projects include SHKP’s luxury development, St Moritz, at 88 Lai Ping Road which comprises 35 units and 24 villas, and La Cresta, a joint venture between HKR International and Nan Fung Development, consisting of 47 units and 14 villas.
Sammy Po, chief executive at Midland Realty’s residential department said about 4,000 to 5,000 new flats will be put on sale in the first three months of the year.
“The primary residential market will become alive again after a one-month hibernation since the stamp duty increase on November 5 and the interest rate hike in the United States,” he said.
Home sales in the primary market plunged 80 per cent to 424 deals for the month to December 29, from 2,216 in November, according to Midland Realty.
Po said the primary market would continue to dominate Hong Kong’s home sales this year.
In 2016, Centaline Property Agency estimated the total number of transactions in the primary market exceeded 16,500 deals with a total value of HK$185 billion, a 21-year high.
The Land Registry will soon announce property transaction data for December and the full year 2016.
SHKP, which sold 3,750 units worth HK$40 billion in 2016, will continue to be a major supplier of new flats this year, with about 7,000 units in nine projects likely to be put on sale, property agents said.
Victor Tin, associate director of the sales department at Sino Land, said the company has two new projects in Kwun Tong and Sai Kung with a total of 2,030 units to be offered for sale this year.
“Developers will be unlikely to offload their new projects at substantially low prices at a time when land prices are soaring. We will see home prices rise steadily this year,” he said.