Can CK Asset's flexible payment terms drum up sales for new Sea To Sky project in Lohas Park?

By Sandy Li / SCMP | June 23, 2020 2:41 PM SGT
On Sunday, CK Asset released the price list for a second batch of 285 units at Sea To Sky. Photo: Jonathan Wong
Saturday was an extraordinarily hot day, but not everyone was staying indoors to avoid the heat. About 50 property agents were scattered around the entrance of the Lohas Park MTR station in Tseung Kwan O, inviting passers-by to visit the area's latest residential project to go on sale.
"By putting down only 5 per cent of the flat price as an initial deposit, you can become a homeowner," said Louis Wong, an agent with Hong Kong Property Services (Agency), one of the brokers selling flats at Sea To Sky, the latest offering by Hong Kong tycoon Li Ka-shing's CK Asset Holdings and Lohas Park's biggest new residential project in about two years. He was trying to keep the 33-degree heat at bay with a handheld electric fan, standing next to the construction site where three 44 to 55-storey towers rise within a 5 minute's walk from the station.
The project, a joint venture between CK Asset Holdings and MTR Corporation, which operates Hong Kong's railway system and is also a major property developer and landlord, comes at a time when Hong Kong home prices have fallen 5.4 per cent since a peak in May last year. Moreover, analysts believe property values will fall 10 per cent to 20 per cent this year amid prolonged economic weakness and rising unemployment.
But CK Asset's initial launch price was the district's most expensive ever on Thursday, it launched 285 flats at an average price of HK$15,823 (US$2,042) per square foot after discounts of up to 22 per cent. It was 5 per cent higher than the adjacent Grand Marini project, built by Wheelock Properties, which was launched in September last year, at an average discounted price of HK$15,075 per square foot.
Two-bedroom flats measuring 471 sq ft at Sea To Sky start at HK$6.4 million, or HK$13,648 per square foot, while four-bedroom flats measuring 1,077 sq ft start at HK$17.7 million, or HK$16,428 per square foot.
On Sunday, CK Asset released the price list for a second batch of 285 units, which will cost HK$16,531 per square foot on average, raising the total number of flats primed for sale to 570 units. More than 6,000 people have registered for the project, but the official sales date has not yet been announced.
Tim and his girlfriend, both of them civil servants in their early 30s, were drawn to the project by CK Asset's attractive payments scheme. "We are aiming for a two-bedroom flat at slightly over HK$7 million. The initial deposit is just HK$360,000 and we can afford it," he said. Without the payments scheme, the pair would have had to put down 10 per cent, or about HK$700,000, as down payment.
The 5 per cent deposit is being used to drum up interest in Sea To Sky. Another 5 per cent will need to be paid in five instalments within the next 450 days, while the remaining 90 per cent will become due when the unit is delivered in early 2022.
But buyers will receive only a 17 per cent discount if they opt for this payment scheme compared with a 20 per cent discount if they chose to payment immediately for the two-bedroom flats. Buyers for the three or four-bedroom flats will receive a 19 per cent discount if they chose the payment scheme, instead of a 22 per cent discount for those who pay in cash.
Under the current Hong Kong mortgage lending rules, first-time buyers can apply for loans up to 90 per cent of a property's value of or below HK$8 million, while 80 per cent for homes that are worth between HK$8 million and HK$10 million. But these apply only to completed homes.
The price list promises an attractive gross profit margin for CK Asset and MTR Corporation. CK Asset outbid five competitors in 2015 for a tender offered by MTR Corporation to secure the eighth phase of Lohas Park, now the Sea To Sky development, for HK$2.9 billion, or HK$2,830 per square foot. The deal included a minimum 15 per cent profit sharing with MTR Corporation. Lohas Park will be Hong Kong's largest residential enclave by 2025, with 58,000 residents in 21,500 units.
The estimated total cost of Sea To Sky would be up to HK$9,000 per square foot, said Raymond Cheng, head of Hong Kong and China research at CGS-CIMB Securities. "The gross profit margin for this project is quite good," he said.
Jeff Yau, a property analyst at DBS Bank (Hong Kong) said the Sea To Sky price list was "market price". "It is not a stunning offer. The price reflects that CK Asset believes it is acceptable in the market," he said.
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.
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