Vibe Centro flats see poor sales as surging prices, new stamp duty dampen appetite

It seems that Hong Kong property buyers may have their limits after all.

Poly Property Group’s latest batch of apartments in Kai Tak saw disappointing sales on Friday, with just 26 of the 93 new units at Vibe Centro finding buyers between 10am and 7.30pm.

It was the second residential project to go on sale since a new tax rule was introduced on Wednesday stipulating for the first time that buyers of multiple units must pay 15 per cent stamp duty on each.

Analysts said the combination of the higher levy and a sharp rise in home prices at the former site of the city’s airport is likely to have dampened sentiment.

On Wednesday, however, Cheung Kong Property Holdings’ Harbour Glory in North Point sold more than 90 per cent of the 152 flats it released in its latest batch, as buyers appeared to shrug off the new regulation.

The average selling price of the 93 units at Vibe Centro, the third batch of the project’s 930 flats, was HK$22,286 per square foot after discounts, about a 3.5 per cent increase from the second batch and 12.5 per cent higher than the first batch’s HK$19,808 per sq ft when it was launched just last month. Poly said the price increases reflect the latest units having different view and sizes, and being located on different floors.

As of 7.30pm on Friday, buyers had snapped up 26 of the new apartments, the developer said.

“Most buyers bought one flat, and the sales were dominated by studio and one bedroom units,” said Sammy Po, chef executive of Midland Realty’s residential department. “The response is within expectations, with prices surpassing HK$20,000 per sq ft. This could have cooled the buying fever.”

He said the number of multiple flat buyers has dropped significantly since the new tax came into effect.

The new policy, announced by the government on Tuesday in a further bid to cool the market, closed a loophole that had allowed more than one unit to be purchased on a single contract, with a single duty payment.

The latest Vibe Centro units range from studios to four-bedroom flats, with area from 228 sq ft to 1,010 sq ft, and are being offered at HK$4.4 million to HK$26 million after factoring in discounts. Poly Property said it has so far sold 296 units at the development since its launch in March, raising revenue of HK$3.1 billion.

Po said prices for new flats in Kai Tak have increased rapidly from about HK$14,000 per sq ft last year to today’s HK$22,000 per sq ft.

JLL’s head of research Denis Ma said HNA Group had succeeded in resetting prices in Kai Tak after snatching four residential plots for an average of HK$13,415 per sq ft.

“Riding on the recent land price rally, One Kai Tak increased pricing of its phase two development by about 13 per cent to HK$18,000 per sq ft from phase one. K. City pushed the envelope higher to HK$18,900 per sq ft while the first batch of units at Poly Property were priced at close to HK$20,000 per sq ft,” he wrote in the March issue of Hong Kong Residential Sales Market.

“These new benchmarks represent a surge of as much as 50 per cent from market expectations prior to HNA’s bids, which were largely based on a comparable secondary sales price of about HK$13,000 to HK$14,000 per sq at The Latitude and Sky Tower.”

Agents said a corporate buyer bought three units at Vibe Centro for a total of HK$66 million.

According to existing tax rules, the corporate buyer will be liable to pay HK$20 million in stamp duty as non-permanent residents and corporate buyers are required to pay 30 per cent stamp duty.

Friday’s sales were arranged on a first come, first served basis instead of the more common ballot system favoured by developers.

One prospective buyer, who gave his surname as Lee, said he planned to buy either a studio or one-bedroom flat for his own use.

“The new arrangement of first come, first serves is probably a kind of gimmick used by the developer to create positive sentiment. I prefer it when sales go through the balloting process,” said Lee, who started queuing at 9am, an hour before sales opened.

Virginia Kao, head of sales and marketing at Poly Property (Hong Kong), said the sales had proceeded in an orderly manner.

“After reviewing our sales method, we will consider what will be the best arrangement for next round of sales,” she said.