Tailor made
With the government determined to crack down on speculation and the global business climate remaining uncertain, selling property is not as easy as it was a year ago.
Continuing the trend from the second half of last year, the secondary market remains frosty, but some new projects are attracting both local and mainland buyers.
Over the past two months, The Coronation in West Kowloon, a joint development by Sino Land, Nan Fung, K Wah and Chinese Estates, has been the star performer in an otherwise lacklustre market. By late January, it had sold more than 640 of its 740 units, for about HK$7 billion.
“The most important factor is location,” says Victor Tin, general manager of Sino Land’s sales department. “The Coronation is in West Kowloon near the ICC, where a lot of investment bankers work. There is a large supplier of high quality customers with strong housing needs.”
Another factor is the future high-speed rail terminal nearby, which connects to 16 major cities on the mainland, Tin says, so it is convenient for people who need to travel there.
Tin says the developers devised a flexible strategy to suit different needs. “The positioning of the property depends on the characteristics of the location,” he says. “We offer a wide variety of sizes, from studio, to 1-, 2-, 3-, 4-bedroom flats, to special units, to suit different budgets.
“If you rely on just investors or just end-users, you won’t get such strong demand. Buyers who are buying for investment purposes may choose the smaller units. End-users would prefer large
sized units.”
Another factor is price. Starting at about HK$13,000 per square foot, the project is priced near the secondhand market of neighbouring properties.
“Buyers are very smart, they will only buy if they feel the price is attractive. Our recent projects tell me our pricing is correct,” Tin says. “If the mortgage rate remains low, then we are confident that we can sell at close to the market price.”
Sino Land says about 30 per cent of the buyers are from the mainland. “Mainland buyers like to invest in assets outside the mainland. They prefer to buy new properties. We have organised roadshows in Guangzhou, and we have held tours to Hong Kong bringing potential buyers here,” Tin says.
While The Coronation has dominated firsthand sales, other new projects are increasing their marketing activities after the holidays. Another new Kowloon project on the market is Chatham Gate in Hung Hum. This project by Shun Tak, Sun Hung Kai Properties, New World and LCH is expected to appeal to upgraders and mainland buyers.
New World’s Signature in Tai Hang could be marketed soon. Sun Hung Kai Properties’ ultra luxury project Twelve Peaks, at The Peak, could also be launched later this year.
According to Midland Realty, luxury properties in urban locations are expected to outperform the overall market this year, partly as a result of the relaxing liquidity situation in China.
“From past experience, if the property market is turning around, it is usually the luxury properties that trigger the rise,” says Chan Kwan-hing, executive director at Midland.
“It is possible that the mainland’s central bank would lower the reserve requirement ratio for banks again in the first half of this year. As the liquidity problem is relaxed, the funds coming to Hong Kong could increase, which will boost the luxury property market.”
Some experts point to the risk brought about by the rising supply of units, however.
“For the past two years, the supply and demand of properties is balanced for the short term, with about 22,800 units completed and 23,000 units sold,” says Wong Leung-sing, associate director of research at Centaline Properties.
“From the second half of 2011, the market began a correction. The sale of new properties became more difficult, with the number of unsold units rising for two successive quarters, from 5,000 in the second quarter, to 6,000 in the third and 7,000 in the fourth. If this number keeps going up, it would mean sales are failing to match supply. If it exceeds 10,000, it is an alarming signal.”
