Hong Kong builders come up with flexible payment plans to woo buyers as sales come to a halt
- Wheelock Properties offers deferred payment plans for flats in five of its developments in the city
- Analysts expect developers to start cutting prices of new projects when market slows down even further
As Hong Kong’s property market takes a turn for the worse, some developers are coming up with novel payment schemes to offload flats amid fears sentiment could sour further.
On Wednesday, Wheelock Properties announced a deferred payment plan along with steep discounts across five of its developments – Monterey, Capri, Napa, One Homantin and Island Residence. The scheme is effective from November 17 up to the end of the year.
Buyers can move into one of the 88 flats and villas that are being offered as part of the scheme after paying only a 10 per cent deposit, with the rest due in about 36 months. The standard practice calls for the payment to be completed within one month of the purchase.
Those who opt for this plan are required to pay another 10 per cent within 900 days of signing the sale and purchase agreement and finish payments on the remaining 80 per cent in about 36 months after signing the agreement.
“Developers probably expect home price to drop [further] and want to unload stock,” said Lung Siu-fung, analyst at China Merchants Securities International, adding that this shows their lack of confidence in the market’s prospects.
Prices of used homes in Hong Kong dropped 1.44 per cent in September, much faster than that in August, according to Rating and Valuation Department.
Lung said more developers might follow suit, though he did not believe the scheme would be exceptionally useful in increasing sales.
Lee Shu-kam, associate professor of economics and finance at Hong Kong Shue Yan University, said the schemes are a sign of developers’ lack of confidence in the market.
“Developers tend to first offer discounts and flexible finance plans [to draw buyers],” said Lee. “When they start cutting prices of new projects, home price will see even bigger drops.”
Lee estimated the actual price cuts will be seen in the middle of next year.
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Of the 88 flats Wheelock is marketing under the scheme, 33 are at its Monterey development in Tseung Kwan O. The prices of the flats here range from HK$6.41 million (US$818,000) for a 260 square feet unit to HK$26.74 million for a 1,078 sq ft unit, after taking into account discounts of up to 15.5 per cent.
Buyers who complete the purchases within 180 days get a further 3 per cent cash rebate.
Ricky Wong, managing director at Wheelock, said the company is offering the extra discounts to help buyers make a decision as surging home prices had eased recently.
“We want buyers to buy homes more easily,” Wong said
In September, Kerry Properties announced a marketing scheme for its luxury 1,429-unit Mantin Heights development in Ho Man Tin, which had 300 flats unsold as of April. The plan allowed buyers to complete the purchase in two years’ time.
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Sun Hung Kai Properties has also launched a similar plan for its Grand Yoho phase II development in Yuen Long, as have Henderson Land Development at its Double Cove project in Ma On Shan and Wheelock Properties at the Grand Napa complex in Tuen Mun.
But all these marketing schemes fall short of CK Asset Holdings’ financing plan. The property conglomerate chaired in October 2016 offered a 12-year payment plan along with steep discounts of 24 per cent to buyers of its flats at The Zumurud in Ma Tau Kok – a scheme largely credited with kick-starting the current trend.