CK Property first to offer 100pc stamp duty subsidy in bid to sell luxury villas in Yuen Long

Cheung Kong Property Holding has become the first Hong Kong developer to offer a 100 per cent stamp duty subsidy for homebuyers, underscoring its eagerness to generate sales of a new luxury project amid the government’s moves to curb property investment demand.

CK Property, the city’s second largest developer in terms of market capitalisation, said buyers of its Crescendo villa development in Yuen Long would receive the equivalent of 30 per cent of the flat’s value to compensate for higher stamp duties.

“It is an unprecedented move to waive stamp duty for buyers,” said executive director Justin Chiu Kwok-hung. “We aim to help buyers purchase their own homes instead of diluting the impact of government curbs to cool the market.”

The government raised stamp duty to 15 per cent for all residential transactions for second-home purchasers, effective from November 5.

On top of the 15 per cent ad valorem stamp duty, non-permanent residents are also required to pay a 15 per cent buyer’s stamp duty. The two taxes raise the cost for overseas buyers by 30 per cent in total.

On Wednesday, CK Property said the first 30 villas at Crescendo, ranging from 1,476 sq ft to 1,950 sq ft in size, will be offered at between HK$22.08 million to HK$37.63 million, or HK$14,964 to HK $19,300 per square foot.

Eight villas will receive 100 per cent stamp duty subsidies, but details of these have not been announced.

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Buyers that don’t need stamp duty subsidies will receive as much as a 25.5 per cent discount.

The Crescendo is located at 75 San Tam Road, Ngau Tam Mei, and comprises 67 villas.

Without CK Property’s incentive, non-permanent resident buyers of the villa development would be paying from HK$6.6 million to HK$11.2 million more in stamp duties for each flat.

Louis Chan, the Asia Pacific chief executive of Centaline Property Agency, said most developers currently subsidise only 70 per cent of the stamp duty payable.

“Other developers may not follow to provide 100 per cent as the large lump sum amount,” he said.

After taking into account the 30 per cent stamp duty subsidy, the price of House No. 5 at Crescendo, as an example, would drop from HK$30.01 million, or HK$18,237 per sq ft, to HK$21.01 million, or HK$12,764 per sq ft.

Sammy Po, chief executive of Midland Realty’s residential department, said CK Property’s profit margin for Crescendo has been significantly squeezed after taking into account the full stamp duty subsidies.

It effectively represents a 30 per cent cut in selling prices, he said, pointing out that the developer only allocated eight villas at this price to attract market attention.

“It shows developers are coming up with all sorts of innovative schemes to lure buyers at home and abroad amid the government roll out of curbs to cool the market,” said Po.

In May 2011 CK Property, then known as Chueng Kong (Holdings), outbid eight competitors in a government auction to secure the residential site in Ngau Tam Mei for HK$662 million, or HK$6,450 per sq ft.

With construction costs of about HK$4,000 per sq ft, Po said the total development cost would be HK$10,450 per sq ft.

Current transaction prices at a nearby villa development, the 22-year-old Royal Palm, were HK$9,100 per sq ft, according to Centaline .