New World's project sells out in Tai Wai as discounts and location draw homebuyers to ignore oversupply and recession

New World Development sold all 157 flats on offer Sunday at The Pavilia Farm project in Tai Wai as of 4pm after buyers lapped up 234 flats in the previous batch on Saturday, the first sell-out for a new property launch in a month.

Homebuyers packed the sales venue on Sunday to snap up the flats, as generous discounts persuaded them to cast aside signs of an impending property glut and rising joblessness amid Hong Kong's worst recession.

The batch on Saturday was reserved for investors with the budget for at least two units each, while the Sunday batch allowed investors to buy one or more units.

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"We saw some homebuyers on Sunday buying two units for self-use rather than investment," said Sammy Po Siu-ming, chief executive of Midland Realty's residential division.

The developer received 22,763 registrations of interest for the 391 flats on sale over the two days, or 58 buyers for each available unit, a record show of interest since 1997. Prices started at HK$6.29 million, or HK$16,618 per square foot, going up to HK$19.9 million for a three-bedroom unit measuring 835 sq ft, after a 20 per cent discount.

"This is a rebound for the property market after the end of the third wave of coronavirus in Hong Kong," said Louis Chan Wing-kit, vice-chairman and Asia-Pacific chief executive of the residential division at Centaline, a realtor. "The market reaction is very strong because of the attractive location and price of this project."

The Pavilia Farm, comprising several tower blocks and the largest shopping centre in the eastern New Territories built atop the Tai Wai subway station, comprises 3,090 flats in total over several phases. The first phase to be released for sale will have 783 units.

"This project is immensely popular because of its convenient location, and Tai Wai hasn't had a new residential project in 10 years. The future expansion of the Tuen-Ma line and a shopping centre over Tai Wai station will only make it more attractive," said Po.

Homebuyers piled into the project. The last time a property launch was this hot was during the previous peak of Hong Kong's property market in 1997, when the Villa Esplanada in Tsing Yi received 30,400 bids and East Point City received 27,000 registrations of interest.

New World's successful launch points the way for Hong Kong's developers to weather the city's worst recession on record, and to prepare for an oversupply of homes due to flood the city.

Up to 11,578 new homes in 38 projects could be launched in the last quarter of 2020, according to developers' websites and Lands Department reports of presale consent.

The city's rate of unemployment stood at 6.1 per cent in August during the height of the third wave of coronavirus infections. Hong Kong's economy is expected to shrink 6 to 8 per cent this year, marking the first back-to-back annual contractions since record-keeping began in 1961.

Discounts appear to be the order of the day, as owner-occupiers and investors have more options to choose from, which give them the luxury of picking for the best deals on offer, agents said.

Proving the point, MCC Real Estate sold seven of 54 flats offered at its L'aquatique project in Tsuen Wan. The units at L'aquatique cost between HK$4.9 million and HK$7 million for flats ranging from 300 sq ft to 429 sq ft.

"As the coronavirus [outbreak] is coming under control, the impact on the housing market won't be that big," said Po. With the US Federal Reserve keeping interest rates low for the next three years, the large amount of liquidity flowing into Hong Kong is helping to support the property market, he said.

New World's sell-out launch reversed two consecutive weekends of flops, when CK Asset Holdings and Sun Hung Kai Properties failed in their attempt to clear unsold property in Hong Kong, amid expectations that the Hong Kong government would increase land supply, which would flood the market with homes and cause prices to drop.

China Evergrande Group failed to unload its leftover flats at the Emerald Bay project. In the two projects that were on offer last week, CK Asset Holdings sold 59 out of the 285 units at the Sea To Sky project at Lohas Park in Tseung Kwan O, while Sun Hung Kai sold six out of the 18 flats at Mount Regency in Tuen Mun.

Hong Kong developers, looking for a strong finish to the year on the back of new project launches, could see their hopes dashed, as analysts fear the market may be unable to fully absorb the new supply amid the possibility of a fourth wave of coronavirus outbreak that could pummel the city's economy further.

The likelihood of selling all these units, however, seems like a tall order given that only 10,041 new homes were sold in the first nine months, compared with 16,851 units in the same period last year, government data showed.

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 © 2020 South China Morning Post Publishers Ltd. All rights reserved.