Sun Hung Kai Properties prices Yuen Long flats at a record high

Sun Hung Kai Properties (SHKP), Hong Kong’s biggest developer, has shrugged off the government’s market-cooling measures launching its latest project in Yuen Long at a record price in the northwestern New Territories.

The aggressive price come four hours after acting-Financial Secretary Chan Ka-keung, said in a Legislative Council meeting on Tuesday morning that the higher stamp duty unveiled by the government in November to tame the city’s runaway real estate prices, had begun to bear fruit as the pace of rising home prices has slowed.

The developer unveiled the price list of the first batch of 166 units at Grand Yoho phase two development, due to be completed as early as next month, at an average of HK$17,998 per square foot on Tuesday afternoon.

After factoring in rebates of as much as 19.5 per cent, SHKP said the average price will reduce to HK$14,488 per sq ft, a level close to units at Taikoo Shing, which average HK$15,114 per sq ft.

“It should set a record price in the Northwestern New Territories, and home price will continue to spiral [upwards] if all units in the first batch sold out,” said Louis Chan Wing-kit, managing director of Centaline Property Agency’s residential department.

“It is getting hard to follow developers’ pricing strategy after seeing land sold by government tender at shockingly high prices,” he said.

A 413 sq ft one bedroom flat on the 50th floor at Block 8 is being offered at HK$8.02 million, or HK$19,421 per sq ft. The price will cut to HK$6.45 million, or HK$15,634 per sq ft after factoring in 19.5 per cent discounts.

But Chan emphasised the sales outcome would serve as an indicator of the market.

Although SHKP has not finalised the official sale date, agents said owners have raised asking prices in nearby projects.

In one instance, the asking price for a 972 sq ft unit at Yoho Midtown, adjacent to Grand Yoho, was raised by HK$1 million to HK$12 million.

Prices for the first batch of units of Grand Yoho phase two development, with sizes of ranging from 413 sq ft to 1,118 sq ft, were HK$6.68 million to HK$20.83 million, or HK$16,064 per sq ft to HK$20,318 per sq ft.

Meanwhile, Citi forecasts Hong Kong home prices could tumble 15 per cent this year.

“Even if home prices rose sharply after digesting all the negatives of rate hikes and property-cooling measures, policy risks would significantly rise and hurt investor sentiment toward developers, which would widen net asset value discounts and lead to underperformance,”according to a report by Ken Yeung, a property analyst at Citi.

“The government would likely introduce very harsh measures next time if the existing steps prove ineffective,” he said.

Acting-Financial Secretary Chan Ka-keung said the market had seen a “significant decline” in transactions in the past two months.

“As always, the government will launch suitable measures at adequate times to maintain a stable development of the property market” Chan said.

Victor Lui Ting, deputy managing director at SHKP said units in the phase two development are being offered at preferential prices in a bid to attract buyers.

“There should have room for price increase in the next batch of units,” he said.

SHKP will provide as much as 21 per cent stamp duty cash rebates for 106 out of 166 units in the first batch.

The tax incentives are intended to attract mainland buyers and corporate buyers, who are required to pay a 30 per cent levy, reflecting a 15 per cent buyers’ stamp duty plus a 15 per cent increased tax for non-permanent residents.

To drum up sales, SHKP will offer mortgages of as much as 120 per cent of a unit’s value for buyers who already own a flat with a value of no less than 70 per cent of the purchase price of the new flats.

Under the existing regulation, the total loan amount extended by banks would be only 60 per cent of the flat value for those who are buying a second home.

Chan believes China Overseas Land & Investment will launch the One Kai Tak phase two development at HK$18,000 to HK$20,000 per sq ft in view of SHKP’s aggressive pricing.

There were about 500 agents gathered at the sales office of One Kai Tak development when the developer opened the show flat for viewing.

“Upgraders have no choice but to buy from developers, even as they will be charged 10 to 15 per cent premium above the secondary transaction prices,” said Chan.

The phase two development comprises of 826 units.

Additional reporting by Nikki Sun