Hong Kong property

Small flats to go on sale at Lohas Park at some of the lowest per-square-foot prices this year for homes near MTR stations

Families looking for larger homes are willing to pay up to 31 per cent more in August than in March at what will grow to be Hong Kong’s largest residential development by 2025.

PUBLISHED : Wednesday, 29 August, 2018, 8:01am
UPDATED : Wednesday, 29 August, 2018, 10:19am

Nan Fung Development is getting ready to sell a batch of small flats at Lohas Park in the New Territories at some of the lowest per-square-foot prices for homes near MTR stations this year.

That is despite developers netting the biggest run-up in prices on larger homes at the massive residential community in Tseung Kwan O.

The units at LP6, which will go on sale at a yet-to-be-announced date in September, are geared towards young property investors. Seven out of every 10 flats will either be one or two bedrooms.

“Most flats at LP6 are small flats worth less than HK$6 million (US$760,000) each, so they need a lower down payment and can attract interest from young buyers looking to get on the property ladder,” said Oscar O, deputy regional sales manager at Centaline Property Agency.

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The average price of the first batch of 487 flats at LP6 will be HK$15,304 per square foot – about 3 per cent lower than the average overall price of units at the nearby Malibu residential project.

The new offerings come as data show that developers have been setting their prices for new three-bedroom flats at Lohas Park higher – in some case by as much as 30 per cent since March.

Those larger flats are aimed at families, many of whom are moving up from smaller places and are attracted to the plan for Lohas Park to become an eco-friendly community near the waterfront filled with green spaces, cafes, pedestrian flyovers and a shopping mall.

How Lohas Park evolved from a landfill site to a much sought-after residential address

When completed in 2025, Lohas Park is expected to become Hong Kong’s largest residential community, with 58,000 residents in 21,500 units.

LP6, with 2,392 units, is the largest development to go on sale in Hong Kong this year. It also is the first to be hit with a new city policy requiring builders of unfinished developments with pre-sale consents approved after June 29 to sell at least 20 per cent of the flats at every launch. For Nan Fung, that will mean selling at least 479 flats each time.

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The LP6 flats will start at about HK$4.49 million for a one-bedroom unit of 307 square feet, or HK$14,632 per square foot after discounts amounting to about 19.5 per cent.

The flat with the lowest price per square foot is a 526 sq ft two bedroom, which will be offered at HK$6.79 million, or HK$12,903 per square foot.

“The price per square foot at LP6 is the lowest among new developments [near MTR stations],” said Alvin Leung, associate director at Ricacorp Properties. “For a two-bedroom flat of about HK$7 million, [monthly] rents can amount to about HK$20,000, which translates to about 2.9 per cent” return a month over the investment.

However, it has been larger units – with at least three bedrooms – that have been the biggest bonanzas for developers at Lohas Park in sales this year.

Lower prices, mortgage offers do the trick for new flats in Kowloon

Between March and August, Wheelock Properties set prices higher for three-bedroom flats at its Malibu by nearly 31 per cent, according to Dataelements, which monitors sales of new flats in Hong Kong.

Meanwhile, Sun Hung Kai Properties’ Wings at Sea Two development has set its most recent prices 21 per cent higher on three bedrooms than in January. That is about twice the price increase the developer netted on one and two bedroom flats, or 9.7 per cent and 11.2 per cent, respectively.

Lohas Park home prices get a lift, thanks to the Sun Hung Kai Properties effect

The outsized gains on the larger flats reflect several factors. Generally they are located higher in the buildings, meaning they offer better views.

“It is usual to first offer flats that are not the best. Then [developers] will gradually release flats on higher floors and with better views,” said Vincent Cheung, deputy managing director for Asia valuation and advisory services at Colliers International. “Then the entry price at the initial launch can be much lower.”

In addition, families that have moved into the Tseung Kwan O area have now wanted to stay but buy bigger places, leading to a run on the bigger units. Lastly, developers up until recently have felt comfortable raising prices, with the biggest run-up in years in Hong Kong being seen in the first half of the year. Many property experts though expect that to change as borrowing becomes more expensive due to the spillover effect of the anticipated rise in the US benchmark interest rate.

“Large flats are in shortage under low supply,” said Oscar O, deputy regional sales manager at Centaline Property Agency.

“Four-bedroom flats are rare in the district. There are about 30,000 private flats in Tseung Kwan O now. But in Tseung Kwan O [where Lohas Park is], these flats are only found in two developments, occupying about 1 per cent [of the total supply] for now. They are not seen in some other neighbouring districts.

“There is [also] a group of buyers seeking to upgrade to larger flats when the Tseung Kwan O area has been developed for about 20 years. The young people [in the district] will establish their own families, so the demand of large flats is relatively high.”

Supply of new flats in Hong Kong to more than meet demand this year, but concerns remain on the horizon

O expects that the larger flats will continue to post larger price gains at Lohas Park.

Separately, Sino Land’s Madison Park development in Cheung Sha Wan in western Kowloon will sell 80 flats on Wednesday.