25 March 2019
Property developers have seen their new residential launches, especially those involving smaller units, draw good response from the public in recent weeks. Photo: HKEJ
Property developers have seen their new residential launches, especially those involving smaller units, draw good response from the public in recent weeks. Photo: HKEJ

Property developers are having a good summer

After a slowdown triggered by macro-economic concerns and US interest rate worries, Hong Kong’s primary residential property market appears to have picked up steam again.

From Yuen Long to Ma On Shan, new units were snapped up by buyers in the past few weeks in a frenzy not witnessed for at least 16 months.

That is good news for our property developers and also for those who have placed their bets on the sector in the stock market.

Among the projects that are grabbing attention now is One Kai Tak, which saw an initial batch of 110 units launched for sale last week.

Marketed as “Hong Kong property for Hong Kong residents”, the developer is ironically a mainland entity — China Overseas Land (0688.HK).

The long-awaited Kai Tak development has drawn strong interest in the market, as has been the case with the Papillons project in Tseung Kwan O.

Papillons is being put up by ChinaChem Group, joining Savannah (a Wheelock venture) in the same area and making Tseung Kwan O the hotspot when it comes to new residential project density.

For a change, the Papillons developer attracted over 2,500 subscriptions from interested parties over the weekend.

The huge demand prompted a property agent to exclaim in a Facebook post: “When was the last time you saw people queuing up for ChinaChem?”

Cute comment, given that the group founded by Nina Wang and her husband is probably the most patient of all property developers.

ChinaChem completed only recently the sale of its last unit at Hongkong Garden in Castle Peak Road, a project whose first phase began more than 30 years ago.

What is surprising in the recent spurt in residential sales in the city is the prices that consumers are willing to pay.

Take Grand YOHO, for example. The Yuen Long units close to a West Rail station managed to sell at HK$13,000 per square feet, or 10 percent above the price of an initial batch.

That is excellent news for its developer, Sun Hung Kai Properties (0016.HK).

Incidentally, Sun Hung Kai also reaped over HK$4 billion from other projects such as Park YOHO in Kam Tin and Lime Gala in Shau Kei Wan this summer, putting it in the best position among all local developers.

As for the property type, it is becoming clear that the smaller the units, the hotter the response.

Consider the Met Blossom, a residential project specializing in studio units and which is being developed by Wang On Properties in Ma On Shan. The project is said to have sold 98 percent of its units.

The Met Blossom and Park YOHO sold a total of 580 units, the most since Hemera, a project co-developed by MTR and Cheung Kong Property (1113.HK) at Lohas Park in Tseung Kwan O offloaded units last year.

Small residential units are seen as good investments during a choppy macro environment following the Brexit vote and potential rate hikes in the United States.

The units are also expected to withstand the government’s policy moves better compared to the larger homes, given Chief Executive Leung Chun-ying’s efforts to boost land supply and curb prices.

The small units have indeed yielded high returns, if we look at some recent projects.

Consider Mont Vert, whose developer Cheung Kong Property created ripples in the market by launching ultra-small units at the project in 2014.

Some units which measured just about 170-square-feet was offered for about HK$1.7 million.

Almost two years later, the subdivided units, or “prison cells” as Apple Daily described them, are now worth HK$2.3 million, up over 60 percent in market value.

Given this kind of return, who can blame the punters for stepping back into the market?

– Contact us at [email protected]


EJ Insight writer

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