Evergrande's Emerald Bay project flops for the second time in two months as buyers stay away amid Hong Kong's economic slump

China Evergrande suffered its second sales flop in two months as Hong Kong's homebuyers gave their collective cold shoulder to its Emerald Bay flats in Tuen Mun, even after a 14-per cent average discount.

The Chinese developer managed to find buyers for 18 flats, or a mere 6.7 per cent of the 269 units on offer at 8pm, according to sales agents. A month earlier, Evergrande sold a third of the first batch of Emerald Bay flats during the peak of the city's coronavirus outbreak.

Since then, Hong Kong's daily confirmed cases have fallen to single digits for six consecutive days, with two new infections today, bringing the city's total caseload to 1,023, with four lives lost.

Still, that was not enough to attract buyers, in an economy mired in its first recession in decades. Unemployment is expected to rise in Hong Kong, as the services, hospitality and retail industries bear the brunt of more than two months of stay-at-home lockdowns, as city authorities try to contain the outbreak.

The cool reception underscores the correction that is underway in the world's most expensive residential property market, a slump that still has some way to go, even after the Hong Kong Monetary Authority slashed its base lending rate by 50 points on March 4 in lockstep with an emergency cut in the cost of money by the US Federal Reserve.

Property investors, currently spoilt for choice amid plunging prices and expectations of more projects in the pipeline, will take their time to return to the market, said Sammy Po Siu-ming, chief executive of the residential division at Midland Realty.

"Buying confidence will gradually return once buyers see that the coronavirus outbreak is under control," he said.

Phase Two of Emerald Bay, with sizes measuring 223 to 314 square feet (29 square metres), were offered at between HK$3.53 million and HK$5.67 million (US$731,500), or HK$16,700 per sq ft on average after the developer kept the discount unchanged at 14 per cent.

The developer made payments easier during today's sales launch, requiring buyers to put down 5 per cent of the property's price as an initial deposit, with the remainder payable only when they get their keys to the completed flats, scheduled for completion in August 2021.

The current sales slump is in stark contrast to the sell-out success in October, when Evergrande launched its first real estate project in Hong Kong with a flying start, selling all 167 apartments on offer in a day, out of 1,982 units including 22 villas for the entire project. Buyers were then drawn by the starting price of HK$3.18 million for a 223 sq ft flat after discounts, or HK$14,260 per sq ft, with the developer throwing in sweeteners, such as flexible financing plans, stamp duty discounts and furnishing.

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