Property giant Vanke is launching its first wholly-owned residential development in Hong Kong, an initiative that will also mark the first major Hong Kong project from a mainland developer.
Vanke has made inroads into Hong Kong’s housing market since 2013. Initially, it participated in the market by taking small stakes in projects. For example, it acquired a 20 percent equity interest in the West Rail Tsuen Wan West Station property development project undertaken by New World Development.
In 2014, it paid HK$860 million for a redevelopment project in Lun Fat Street Project in Wan Chai and developed it into a service apartment project called The Luna.
Le Pont, the new project it is launching this time, is located in Tuen Mun. Vanke bought the Le Pont site for HK$3.82 billion in 2015, or HK$4,541 per square foot. The development is expected to provide a total of 1,154 flats.
As the first major project brought by a mainland developer, there are certain unique aspects to Le Pont.
First of all, the Chinese name Shang Yuan (上源）comes from a Tang Dynasty poem, meaning beautiful views. Hong Kong developers have completely different style when it comes to project naming.
Also, while Hong Kong developers typically care more about luxurious and fancy club house, Le Pont highlights the green concept.
The development would set aside 30 percent of the area for different plants. There will be a one kilometer jogging track and an organic farm for parents to experience life as farmers along with their kids.
Also, there will be solar panels on the roof top and a rainwater collection system as well.
This kind of design and facilities are rarely heard of among Hong Kong residential apartments, yet Vanke has already introduced similar designs in some of its high-end developments on the mainland.
The pricing strategy also sets Le Pont apart.
The first batch of 231 flats is expected to average HK$11,073 per square foot, compared with HK$11,000 to HK$15,000 per square foot for nearby apartments in the secondary market.
This low offer may not only put pressure on the secondary market in the area, upcoming new developments in New Territories could also be affected.
It’s rumored that Guangdong province is considering a proposal to scrap the housing pre-sale system, which allows property developers to secure funds before project completion. If so, that would deal a heavy blow to developers’ cash flow.
Yu Liang, president of Vanke, has warned earlier that the next three years would be tough.
Against such backdrop, it’s not surprising that Vanke has chosen an aggressive pricing approach as it puts priority on speeding up sales and boosting cash inflows.
Other major Chinese developers will also be offering their projects soon, and they are likely to bring more fresh elements to the Hong Kong property market.
This article appeared in the Hong Kong Economic Journal on Sept 24
Translation by Julie Zhu
[Chinese version 中文版]
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