Hong Kong’s homebuyers piled into the real estate market and ignored a raging coronavirus outbreak in the Kowloon side of the city as they almost cleared out the second new launch of property projects this year.
Nan Fung Group and MTR Corporation sold 176 of the 179 flats at the LP10 project at Lohas Park in Tseung Kwan O, receiving more than 5,100 registrations of interest, or 27 bids for every available flat, according to sales agents. The developers, who reported HK$1.6 billion (US$206 million) from today’s sale, have offered to put a second batch of 128 flats on the market.
“Spring has arrived early, and brought a booming market with it,” said Kelvin Cheong, operation director of the residential department of Midland Realty, the sole publicly traded network of real property agents in Hong Kong. “The stock market’s surge in recent days [gave the] the sentiment on entering the property market a positive push, which increased the transactions in both the new and secondary housing markets.”
The strong response at LP10, following last weekend’s sell-out launch at Kai Tak, is a shot in the arm for the real estate industry, which is grappling to regain its pace after a decade-long housing bull run was knocked off its footing by months of anti-government protests and a coronavirus pandemic. A record flood of cheap money unleashed by global central banks has buoyed the demand for assets from shares to real estate, creating a stark contrast with the underlying economy which is going through its worst recession in decades.
LP10, the 10th phase of a massive development at Lohas Park, comprises 893 flats in total. The first batch released for sale this weekend comprises two-bedroom and four-bedroom units from 484 square to 1,205 square feet (112 square metres). The second batch on offer next week will comprise two-room and three-room flats of between 484 and 1,004 sq ft.
The developers offered the first batch for HK$15,888 per square foot on average after a discount of 20.5 per cent, little changed from the average price of HK$15,823 per sq ft at CK Asset’s Sea to Sky project in the same neighbourhood, which launched last June. Phase nine of Lohas Park, Wheelock Properties’ Ocean Marni, failed to sell when it launched in March last year just as the first wave of the coronavirus pandemic worsened, at HK$15,238 per sq ft.
The cheapest flat in this batch was priced at almost HK$7 million, or HK$14,188 per sq ft. Larger flats exceeding 700 square feet in floor area qualify for a 70 per cent mortgage by the developers, requiring buyers to put down only 30 per cent of the flat’s price as down payment. Seven in every 10 customers of LP10 were buying the property for their own use, while the remaining 30 per cent were investors, Midland’s agents said.
“Sales in recent projects had been very favourable, [because] many buyers entered the market before the Lunar New Year” to get ahead of possible rising prices after the festive season, said Midland’s Cheong.
Spurred by an upbeat stock market that saw the benchmark Hang Seng Index at a 20-month high last week, the city sold 2,165 homes on the secondary market so far this year for HK$18.59 billion, according to data provided by Centaline Property Agency.
January’s sales may increase by 2.7 per cent from last year to 3,800 units, while the transaction value may rise 4.1 per cent to HK$33 billion, Centaline said.
The strong sales momentum has encouraged developers to accelerate the launch of their higher-priced projects. Wheelock Properties’ Monaco luxury apartments, built at the city’s former Kai Tak airport site, sold all 145 flats in its first release within five hours even at HK$22,669 per sq ft.
The strong sales came as unemployment rate in the city reached 16-year high in the three months ended December, with 250,000 people out of work amid the prolonged fourth wave of coronavirus pandemic. Some 10,000 residents found themselves confined for emergency Covid-19 testings on Saturday, the most stringent measure in more than a year of pandemic control in the city.
The Hang Seng Index has risen more than 8 per cent so far this year, buoyed by record inflows of mainland cash through the southbound channels of the Stock Connect programme. Gauges on the Wall Street in recent days also saw record highs.
