Smaller developers react to slowing market by selling entire buildings
More buys likely, say agents, as bulk sales can reduce risk and save on individual marketing costs
Small to mid-sized property developers appear to have shifted their focus for profit in recent months by selling entire residential blocks to investors as home prices recorded their slowest gain in 16 months, increasing fears of a drop in demand, says industry watchers.
Yuexiu Property is the latest developer to sell an new residential building – in Ho Man Tin, a mostly residential area in Kowloon – for HK$820 million (US$104 million) in its case to Grand Ming Group Holdings, raising total transaction value for turnkey developments since January to nearly HK$4 billion.
“We expect more such cases, as bulk sales can reduce risk and save marketing costs,” said Thomas Lam, a senior director at Knight Frank.
“The developer also need not go through the highly regulated procedures, when releasing projects for pre-sale to individual buyers.”
The Grand Ming sale comes as the price of secondary, or used, homes in Hong Kong rose at the slowest clip in 16 months in July, suggesting the breakneck pace of gains looks like losing momentum.
The city’s monthly home price index for August rose just 0.089 per cent from June to 336.8, according to data from the Rating and Valuation Department.