Hong Kong property

Sun Hung Kai wraps up biggest weekend launch with a sell-out in Yuen Long as vacancy tax bites

The developer pulled in a combined HK$2.8 billion (US$357 million) after selling all 328 flats in Yuen Long, with 7,300 bids received

PUBLISHED : Saturday, 04 August, 2018, 8:17pm
UPDATED : Sunday, 05 August, 2018, 11:32am

Hong Kong’s biggest sale of residential real estate after housing policies were unveiled on June 29 got off to a good start this weekend in Yuen Long, as a vacancy tax pried loose a trove of apartment units to ease the city’s pent-up demand for homes.

More than 7,300 buyers submitted bids for 328 units of Sun Hung Kai Properties’ Park Yoho Milano project, or an average of 21 bids for every available unit, agents said.

The developer pulled in a combined HK$2.8 billion (US$357 million) after selling all 328 flats, as a crowd of thousands thronged the sales venue in a 500-metre queue that extended from the International Commerce Centre to the Western Harbour Crossing.

“Buyers showed overwhelming response in the afternoon,” said Louis Chan, Asia-Pacific vice-chairman and chief executive for residential sales at Centaline Property Agency. “The crowded scene is a rare sight in recent years.”

Mr Cheung, an office manager in his twenties, said he was disappointed that other buyers had snapped up all the smallest single-bedroom and twin-bedroom flats, with prices ranging from HK$5 million to HK$7 million.

“Prices are reasonable so I wanted to buy a flat for my own use and lease the one I am living in,” said Cheung.

The successful sale vindicates the tax announced on June 29 by Chief Executive Carrie Lam Cheng Yuet-ngor, a programme designed to compel developers to release their inventory of completed flats for sale to ease the pent-up demand in the world’s most expensive real estate market.

Before the tax, some city developers would hoard their completed property, creating an artificial shortage that caused median prices to rise for 27 consecutive months, putting housing beyond the affordability of many first-time buyers and school leavers.

Demand was so strong in some projects that some developers were able to raise prices between batches of sales, some times by as much as 20 per cent within a week of each other.

“The vacancy tax added competitive pressure” to developers, Centaline’s Chan said. “They’ve been speeding up their sales launches, with attractive discounts and more reasonable prices.”

Yoho Park Milano, scheduled for completion in April 2019, received its occupation permit early this year. Its developer would be liable for Hong Kong’s vacancy tax, if the project is not released for sale within six months of receiving the occupancy permit. The draft bill is expected to be enacted into law over the next year, and will be made retroactive to its announcement date.

Developers race to exploit a loophole in Hong Kong’s vacancy tax before a patch is made

To help clear the pipeline, Sun Hung Kai Properties priced its project 10 per cent cheaper than other comparable projects in the neighbourhood.

One buyer was so keen that he is planning to put down more than HK$23 million for three units, said Sammy Po Siu-ming, chief executive of Midland Realty’s residential division.

Separately, Henderson Land Development launched eight units of its Cetus Square Mile project in Mong Kok for sale, due for completion in the fourth quarter of 2019. One sale was recorded as at 5pm.