Just a third of the apartments on offer at Hong Kong developer Henderson Land's Reach Summit project were snapped up on Tuesday, a reflection of buyers' cautious outlook about the city's property market and a rebound that has followed a five-month correction in prices.
The developer put 101 units on sale. Of the 32 apartments sold, most were studios and one-bedroom units as they involved smaller sums. About 70 per cent were bought by users, according to agents, with the rest going to investors.
The apartments, ranging from 255 to 381 sq ft in area, were offered at an average discounted price of HK$16,088 per square foot (US$2,052), an increase of 1.3 per cent over the average price of HK$15,881 offered when the project was launched late last year. The selling prices of the latest batch ranged from HK$4.4 million to HK$6.5 million (US$561,000 to US$830,000) each.
"This sounds like a reasonable sales result. Although the overall sales were not high, most of the studios and one-bed flats have been sold," said Sammy Po, chief executive at Midland Realty's residential department. "I expect the market's positive sentiment to continue this month and the next."
Hong Kong home prices rose 1.6 per cent in the first two months of this year, after dropping 9.2 per cent between August and December last year, according to the city's Rating and Valuation Department.
Prices have been bolstered by recent stock market rallies in Hong Kong and mainland China, as well as a dovish stance on interest rates by central banks.
The favourable sales result at Reach Summit comes close on the heels of the sale of 49 units worth HK$630 million at Nan Fung Group's LP6 project in Tseung Kwan O over the weekend.
Thirteen of the units at LP6 were snapped up by a group of buyers who acted through a company. They will have to pay a steep stamp duty of 30 per cent, which reflects their confidence in their purchases, Po said. He added that he expected more such deals to surface in the coming months as investors would rather place their bets on several small units than on one large luxury property.
Louis Chan Wing-kit, vice-chairman for Asia-Pacific at Centaline Property Agency, said he expected home prices to rise a further 3 to 5 per cent by midyear, given expectations of stable to slightly lower interest rates until next year.
The results showed buyers " especially those who can only afford smaller and less well-located apartments " are still cautious about taking a plunge on units priced HK$6 million or higher, a level above which they can only obtain a mortgage less than 80 per cent of the unit's value, Chan said.
"Only a few months ago, people were expecting higher interest rates this year and next year, so people are still digesting this policy stance change," he added.
Reach Summit, located a 15- to 20-minute walk from the Long Ping MTR station, is due to be completed in September next year. A joint venture between Henderson and New World Development, the project consists of two towers with a total of 504 units, all of them small apartments with two bedrooms or less.
The project reported disappointing sales last November, after sentiment was hit by rising interest rates, a falling stock market and growing concerns about the US-China trade war.
To drive sales, in December the developers offered a HK$300,000 electric car as top prize to the winner of a lucky draw in which buyers participate. The offer is valid until the end of this month.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.