Developers race to draw buyers
(Published by South China Morning Post, 15 Sep 2011)
As fears of a market slump loom, companies rush out price lists for new developments
Hong Kong developers are accelerating their marketing of four new projects – a total of nearly 2,700 flats, 80 per cent of which are located in Tseung Kwan O – over fears the property market may worsen. Two major developments in Tseung Kwan O, La Splendeur and The Wings, will contribute close to 2,200 flats; the rest are in Happy Valley and Aberdeen.
The 1,168-unit La Splendeur – due to be completed in 2013 – is a joint venture development by Cheung Kong (Holdings), Nan Fung Development and MTR Corporation. The Wings is being developed by Sun Hung Kai Properties and MTR Corp.
In response to Cheung Kong’s announcement on Friday that it was selling units at La Splendeur for lower than expected prices, Sun Hung Kai Properties said yesterday it would release the price list for The Wings as early as next week, and put flats on the market by the end of the month.
The Wings, due to be completed by the end of 2012, comprises 1,028 flats at Tseung Kwan O station – one stop before Lohas Park station where La Splendeur is located.
“The area will become a battlefield [for potential buyers],” said Leland Sun, chairman of mortgage broker Pan Asian Mortgage.
But Sun said developers were releasing their projects rashly, reflecting their worry over a further market downturn next year.
“Property prices have already begun to fall in some areas by at least 10 per cent to 15 per cent in the secondary market,” he said. “Developers finally are catching up to reality.”
Hit by a fall in the Hong Kong stock market and growing concern about a global recession, the property market is expected to experience a drop in transaction volume in the third quarter – to 14,500, the lowest since the final quarter of 2008.
“Compared with several months ago, it will be harder for developers to sell flats due to slackening demand,” said Pang Shiu-kee, managing director of SK Pang Surveyor. “They have to offer an array of incentives, such as extending the completion for the sale and purchase, and providing top-up mortgages to entice sales. But such strategy will kill the secondary market as individual owners will hardly compete with Cheung Kong and [Sun Hung Kai] when it comes to providing similar preferential payment terms to promote sales.”
Yesterday, Cheung Kong released the second batch of 108 units at La Splendeur for pre-sale, raising the total to 216 on sale. The developer has not announced the official sale date.
The average price for the second batch is HK$5,981 per square foot of gross floor area. That is just HK$40 per square foot more than the first batch of 108 units released on Friday. For potential buyers preferring cash payment, the average price was HK$5,623 per square feet, or HK$39 per square foot more.
Other upcoming projects include K Wah International’s Marinella in Aberdeen and Nan Fung Development’s Winfield in Happy Valley.
Leland L.Sun
Director and Founder of Pan Asian