Residential housing developments in the New Territories. Mike Clarke / AFP
Hong Kong developers, led by Sun Hung Kai Properties Ltd and Cheung Kong (Holdings) Ltd, are speeding up home sales as buyer sentiment wanes after the government's latest efforts to curb real estate values.
Sun Hung Kai on Wednesday began selling the first batch of 76 apartments at its Imperial Cullinan development in the West Kowloon district, the first new project to go on sale after the government introduced new measures to rein in home prices on June 10, according to senior sales director Allen Woo. The average selling price of about HK$18,700 ($2,400) per square foot is about 15 percent lower than what the company predicted a week ago.
Home prices may fall as much as 30 percent from now to 2013 on rising mortgage rates and as the government tries to stem real estate values that increased more than 70 percent since the beginning of 2009, according to Barclays Capital Plc. There may be "downward pressure" on home prices in the second half because values are beyond the reach of most residents, Cheung Kong Executive Director Justin Chiu said last week.
"Market sentiment has been dampened by the recent negative news," said Katie Chan, an analyst at Hong Kong-based Haitong Securities Ltd. "It's reasonable for developers to be less aggressive on setting selling prices of their new projects. It may be a strategy to test the market. If the response is good, they may raise the prices for flats with better views."
The Hang Seng Property Index, which includes Sun Hung Kai and Cheung Kong, rose 2.8 percent at the close, its biggest gain in three months. Sun Hung Kai advanced 2.3 percent and Cheung Kong 3.8 percent.
Cheung Kong will begin selling as many as 1,168 units at the Lohas Park project in the Tsueng Kwan O district "as soon as possible", spokeswoman Emily Lai said on Thursday, declining to give an exact date.
Hang Lung Properties Ltd, the third-biggest Hong Kong developer, may sell more apartments at its Long Beach project next to the Imperial Cullinan, the Standard newspaper reported on June 16. Betty Law, a spokeswoman for Hang Lung, declined to comment on the report, saying the company has "no timetable" for the sale.
Hang Lung has fewer than 200 units to be sold at its Harbourside development in West Kowloon, Chairman Ronnie Chan said in a Bloomberg Television interview on Thursday, without giving a timeframe for when the developer will start offering them. Hang Lung hasn't sold any homes in the city in at least a year.
"No hurry," said Chan. "I am confident of the long-term future of Hong Kong. Especially the luxury stuff, they are still going up."
Chan said he is not counting on Hong Kong residential prices coming down as there is real demand in the market.
Transactions of used apartments at 35 of Hong Kong's biggest private developments fell to 73 in the week ended June 26, the lowest since February last year, according to Midland Holdings Ltd, the city's biggest publicly traded property agency.
The number of home transactions dropped for a fifth straight month in May to 9,681, more than 25 percent lower than November's 13,189, according to the Land Registry. They may decline another 10 percent to 20 percent in the next two months, according to Centaline Property Agency Ltd.
(HK Edition 07/01/2011 page2)