MTR effect: prices jump on new Hong Kong South Island Line

The opening of the new South Island Line is having a profound effect on Ap Lei Chau, Wong Chuk Hang and Ocean Park, along with property prices in the area.

The HK$16.5 billion MTR line, operated with driverless three-carriage trains, runs from South Horizons in Ap Lei Chau to Admiralty via new stations at Lei Tung, Wong Chuk Hang and Ocean Park. And, according to the MTR, the line serves some 170,000 people per day.

According to estate agents in the area, there was a rise in buyer and tenant interests over the past few months, driving prices up in some of the popular estates.

The feel-good sentiment, generated as a result of the MTR line, has also prompted some homeowners to raise their asking prices, real estate agents say.

In Ap Lei Chau, the average sales price of South Horizons flats jumped to above HK$15,300 per square foot in December from about HK$13,320 per square foot in January last year, according to Land Registry records.

Last month, the highest priced deals completed in South Horizons on record involved the sale of an 886 sq ft, high-floor unit in Block 16, which sold for HK$14.8 million, or HK$16,704 per square foot.

It is believed that the pricing of South Horizons is starting to catch up with Taikoo Shing, a long-established housing estate on the island’s east side, which usually sets the benchmark for mass-market prices.

As a comparison, the average price of flats at Taikoo Shing traded last month was about HK$15,930 per square foot.

Inquiries from potential buyers and renters have been steadily rising in the past few months of 2016, just before and after the opening of the South Horizons station, says Rico Lam, a senior sales manager with the South Horizons branch of Midland Realty.

“Out of 10 potential buyers we take to view homes, two or three are actually from outside of the area. We are also handling a wider variety of inquiries from prospective tenants, as well as those planning to relocate to the area, particularly to be near the MTR station.

“After the commencement of the new MTR line, the journey to Admiralty and Central has been cut to less than 15 minutes. This has made South Horizons an ideal alternative to other MTR-connected complexes for commuters seeking a convenient home within the island.”

Sales in the secondary market were subdued during the Christmas and Lunar New Year holidays, but Lam says he expects activity to improve this month.

For expats, newer, modern apartment complexes, such as Larvotto and Marinella, are the preferred housing choice in Aberdeen and Ap Lei Chau, respectively, says Josephine Lo, a director of residential agency at Knight Frank.

Monthly rents in the Larvotto range from about HK$20,000 for a 463 sq ft flat, to about HK$85,000 for a 1,795 sq ft family apartment, according to Lo.

At Marinella, a 600 sq ft one bedroom home commands about HK$33,000 a month, while a high-floor four-bedroom apartment, measuring 1,949 sq ft, rents for about HK$148,000 per month.

Because of a diverse layout mix, these developments are able to cater to a wider range of tenants with different family compositions and budgets.

“While the proximity of MTR station certainly makes the location more convenient, higher-budget tenants tend to be more concerned about availability of car parks, which these two complexes have more to supply to their residents,” she says.

“The second thing is whether the complex can provide a well-balanced lifestyle ... natural surroundings, and on-site recreational and leisure facilities.”

Although rents increased last year, Lo says more new rental supply from the recently completed Marina South, located in southern Ap Lei Chau, is going to exert downward pressure on the leasing market.

China Overseas announced earlier that four luxury apartments at Marina South were sold to a single buyer for about HK$230 million through a tender.

The four units, together measuring approximately 7,351 sq ft of saleable floor area, are Units A and B on the 35/F in Block 1, and Units A and B on the 35/F in Block B. They sold for an average unit price of HK$31,252 per square foot, according to the developer.

As of mid-January, 87 units out of a total of 114 at Marina South were sold, generating over HK$4.23 billion in revenue for the developer.

Medium- and long-term housing supply will mainly come from housing developments around and near the Wong Chuk Hang station and southern Ap Lei Chau.

At least 26 companies, including developers and consortiums, have indicated an interest in developing a residential site at Wong Chuk Hang station, which has been earmarked as the first phase of a larger development.

The plot has a maximum buildable floor area of about 577,000 sq ft, which can be turned into about 800 homes spread across two buildings.

In mid-January, the government also put up another residential site, on which a maximum gross floor area of about 762,100 sq ft can be built, at Lee Nam Road of Ap Lei Chau, for sale by tender.

In the same month, the draft Aberdeen and Ap Lei Chau outline zoning plan was approved. The planning scheme area covers about 784 hectares, including Tin Wan in the west and part of Aberdeen Country Park in the north.

The area includes the zoning of high-density and low-density residential developments for about 60.06 hectares of land, and redevelopments or conversions of industrial buildings into residential homes.