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Buyers line up for the 228 apartments on offer at the Mayfair By The Sea 8 development from Sino Land, in Hong Kong’s Tsim Sha Tsui district. Photo: Handout

Discounted Hong Kong development does not match demand for smaller apartments, fails to sell out

  • Only 171 out of 228 units on sale at Mayfair by The Sea 8 sold on Wednesday
  • Average price after discounts about 26.5 per cent lower than that fetched by another project in Tai Po in June last year

Hong Kong developer Sino Land managed to sell only 75 per cent of apartments put up for sale at heavy discounts at its Mayfair by The Sea 8 development in Tai Po. By 3pm on Wednesday, it had sold 171 out of a first batch of 228 units.

The sale comes amid warnings by analysts about further declines in prices. And at an average price of HK$13,228 (US$1,686) per square foot after the discount in the first price list, the property is going for 26.5 per cent less than the HK$18,000 fetched by St Martin, another Tai Po project launched in June last year.

According to Centaline Property Agency, one of Hong Kong’s largest, this shortfall is down to a high supply of three-bedroom apartments in the Pak Shek Kok area.

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“Two-bedroom flats were popular and sold quickly, but the three-bedroom apartments are proving difficult to sell, because there are [plenty of] choices [in the area],” said Louis Chan, chief executive of the residential division at Centaline. The development was also designed as a luxury residential area, and does not match the needs of first-time buyers looking for smaller flats. Among the 228 apartments on sale on Wednesday, 130 are two-bedroom units and 96 are three-bedroom units.

Prices at Mayfair start at HK$6.07 million for a 490 sq ft apartment, or HK$12,396 per square foot. The development received 1,189 registrations of interest, which means more than five people were competing for an apartment.

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Analysts, meanwhile, once again warned of a slowdown in economic growth in Hong Kong thanks to rising interest rates in the United States, and the trade war between Washington and Beijing.

“Hong Kong and Singapore are most at risk of a global slowdown, being open economies with a sizeable financial services sector,” according to a report led by Harry Tan, head of research, Asia-Pacific, at Nuveen Real Estate, a global property investment manager. “Sentiment in Hong Kong will also be overshadowed by rising US rates, by virtue of the dollar peg.”

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A 925 sq ft apartment in Park Yoho Genova in Yuen Long sold for a loss of HK$2.88 million, or 24.3 per cent, on Tuesday, excluding stamp duties of HK$900,000. Its eventual selling price of HK$9 million, or HK$9,730 per square foot, was also about 35.6 per cent less than the average price of about HK$15,100 per square foot fetched at the neighbouring development of Park Yoho Napoli this month.

Home prices could drop by up to 20 per cent this year, said Eric Lee, chief executive of agency Century 21 Goodwin, citing effects of the US-China trade war.

Buyers, on the other hand, appeared to be generally optimistic about the market. A couple who bought a two-bedroom apartment for investment purposes at HK$6.5 million, said they expected home prices to remain stable.

The Mayfair development is also the first Sino Land project to go on sale after it settled a dispute over commissions with agents during the sale of its Grand Central development in Kwun Tong. Centaline’s Chan said he was satisfied with Sino Land’s announcement that it would pay a commission rate of 2 per cent to 2.5 per cent for Mayfair, even though he wanted a higher rate, of between 2.5 per cent and 3 per cent.