22 May 2019
Sun Hung Kai's Century Gateway in Tuen Mun fetched a record HK$41.37 million for a 1,719 square-foot duplex. Photo: HKEJ
Sun Hung Kai's Century Gateway in Tuen Mun fetched a record HK$41.37 million for a 1,719 square-foot duplex. Photo: HKEJ

Why a HK$41 mln duplex may be the last good news for developers

It’s not unusual for a property developer to trumpet a record-breaking deal to justify a hefty land premium it paid for a tender in the same district.

A case in point is Sun Hung Kai Properties.

Hong Kong’s biggest property developer announced that a duplex unit in its Century Gateway development in Tuen Mun was sold for a record HK$41.37 million (US$5.34 million) two days after it won a Yuen Long site for a chart-busting HK$9.32 billion.

At more than HK$24,000 per square foot, the 1,719 square-foot duplex with a rooftop beat all transactions in northwest New Territories, a rural area before the West rail line rolled into town.

The scorching weekend sales included 275 Housing Society units on the hottest two days in Hong Kong in 130 years.

(Chief Secretary Carrie Lam, who famously confessed she can only afford a flat in the New Territories, is running out of options.)

The buoyant property market could be the last leg of a bull run in residential sales. 

Why it has lasted this long remains a mystery given the poor retail environment that has prompted cuts in commercial rents, coupled with the collapse of the Chinese stock market.

But an interest rate hike in the US which could come next month will hit Hong Kong homeowners hard because the currency peg to the greenback means they will start paying higher mortgage rates.

A strong US dollar will batter emerging economies, Financial Secretary John Tsang wrote on his blog on Sunday.

Tsang warned of an asset sell-off in emerging markets similar to that in mid-2013 and last year when the Federal Reserve halted quantitative easing.

That perhaps explains why almost all developers are taking advantage of this golden window to cash out.

Jacinto Tong, a property bear who earlier predicted the housing market would fall 30 per cent this year because of over-gearing, is still bearish although he missed his forecast.

He said Singapore, a neck-and-neck competitor to Hong Kong in many respects, saw a 15 per cent drop in property prices last year and that Hong Kong is headed in a similar direction.

It is also perhaps time for Leung Chun-ying to do something about the property market.

Leung, who is known to be a property expert by virtue of his past work as a surveyor, promised to keep the property market in check by increasing supply.

But the reverse happened. The housing market kept going up, hitting record highs and disappointing a lot of people, particularly the younger generation.

That is why he has an extra incentive to cool residential properties in the run-up to the next election in which he is expected to contend.

But can he tame the market?

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EJ Insight writer

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