Hong Kong developers rush to sell empty flats ahead of new vacancy tax

Hong Kong’s property developers are rushing to offload empty new flats before the government unveils details of a vacancy tax this month aimed at preventing hoarding, as it seeks to ease the city’s housing crisis.

New World Development will release the last 38 homes – left ­unoccupied for the past five years – in phase one of its Park Villa project in Yuen Long at discounted prices on Saturday. Sun Hung Kai Properties (SHKP) hopes to clear its stock of 350 empty apartments at Grand Yoho phase two, near Yuen Long Station, in the second half of this year. Grand Yoho was completed in mid-2017.

And CK Asset Holdings will release two units of 1,100 square feet each at Ocean Supreme in Tsuen Wan for sale on Saturday, according to the project website. It has 24 remaining units at the project, which is close to completion.

Analysts predicted more developers would follow suit, fearing the impact of the new tax planned by the government. They expected the sales to go some way towards easing market concern that developers were hoarding flats.

“Developers have to do something in light of growing pressure and the imposition of tax on empty flats,” said Raymond Cheng, head of Hong Kong and China property research at CGS-CIMB Securities.

Alfred Lau, a property analyst at Bocom International, said developers would first unload their inventory in areas where they expect to see limited upside potential.

“With the vacancy tax to be rolled out soon and an imminent increase in interest rates, developers are disposing of these remaining flats before market sentiment deteriorates,” he said.

Details on vacancy tax for Hong Kong flat hoarders coming in June

New World will price its units at Park Villa from HK$36.68 million to HK$51.8 million, according to the company’s project website.

The villas, whose areas range from 3,344 square feet to 4,278 square feet, will go on sale for HK$10,530 to HK$14,742 per square foot after factoring in a discount of as much as 18 per cent. The development secured an occupation permit in 2013 but has sold just 13 villas so far.

A 3,484 square foot villa will be offered for HK$11,057 per square foot or HK$38.52 million after discount on Saturday, 8 per cent lower than a neighbouring villa of similar dimensions that went for HK$41.85 million, or HK$12,012 per square foot, in March.

Victor Lui Ting, deputy managing director at SHKP, said there were 550 unsold units at Grand Yoho phase two in Yuen Long Station.

“The sale of 200 units at Grand Yoho will be delayed by the nearby construction work of MTR Corporation. The remaining 350 units should be cleared in the second half of this year,” he said.

Five of these units, measuring 705 square feet to 1,115 square feet, will be offered for tender from June 29 until July 18, with no indicative price.

SHKP is the largest holder of empty flats in the city, with an inventory of 1,000 including at The Cullinan luxury development near Kowloon Station.

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Chief Executive Carrie Lam Cheng Yuet-ngor told lawmakers on June 13 that a decision on the vacancy tax would be announced later in June.

Lam made it clear that the government wanted flats to be occupied instead of stockpiled and a vacancy tax would only be implemented after a comprehensive study and public consultations.

The Real Estate Developers Association said it would oppose the vacancy tax.

The group, which represents major developers, argued that there were only 3,000 flats that could be categorised as vacant.

“Developers are likely to release these 3,000 empty flats in an orderly fashion instead of flooding the market,” Cheng said.