Some residential units being spuriously marketed as luxury properties could see their prices fall by as much as 50 percent once a market adjustment takes place, a property tycoon warned.
Imitation luxury flats will undergo a major price correction, said David Chiu Tat Cheong, chairman of Far East Consortium International (00035.HK).
The gap in per-square-foot prices between ordinary and so-called penthouse units in some developments is so wide that the pricing strategy will fall apart in a market downturn, he said.
It won’t be surprising if prices of such penthouses fall to HK$50 million to HK$60 million from current levels of over HK$100 million, the Hong Kong Economic Journal quoted Chiu as saying.
As for the broader market, Chiu believes the US Federal Reserve’s expected hike in interest rates will not cause major turbulence in Hong Kong asset prices.
Any rate hike will be mild and the policy tightening will be gradual, he said.
In Hong Kong, there is sustained demand for home units costing less than HK$8 million, said Chiu, also noting that many locals prefer private units rather than government funded housing.
Far East Consortium plans to launch 20 property projects worth an aggregate HK$35 billion. The projects will be in Hong Kong, mainland China, Australia and Malaysia.
Chiu said the company will continue to diversify its markets in order to mitigate risks.
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