Coronavirus disrupts Hong Kong's property industry as construction on 90 per cent of projects delayed
By Lam Ka-sing kasing.lam@scmp.com
/ https://www.scmp.com/business/article/3081897/covid-19-disrupts-hong-kongs-property-industry-construction-90-cent?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp&utm_content=3081897 |
The Covid-19 outbreak has thrown a spanner in the works of Hong Kong's property industry. The delivery of at least 1,900 homes to buyers will be delayed, while some developers risk losing hundreds of millions of dollars in booking sales, as the pandemic disrupts construction activity in the city due to supply shocks and a slow down in government approvals.
The completion date for Wheelock Properties' Malibu project in Lohas Park, Emperor International's Seaside Castle in Tuen Mun and a joint venture development between Chevalier Group and Urban Renewal Authority in Kowloon, have been postponed between two and six months.
The development comes after data from the Buildings Department showed on Monday that no construction was started on new projects in the first two months of this year, the first time since records started in 2002.
Meanwhile, design consultancy Arcadis said that the progress of more than 90 per cent of projects in the city was delayed in February and March by varying degrees as workers could not return from China due to the lockdown after the Lunar New Year holiday and shortage of raw materials as factories were closed to contain the outbreak in mainland China.
Francis Au, Arcadis' head of cost and commercial management for the Greater Bay Area, said that in the past construction work on most projects would be at 80 to 90 per cent capacity within one to two weeks of the Lunar New Year holiday. "Delays on projects are almost certain," said Au, adding that the Covid-19 outbreak is likely to have a long-term impact on the construction market.
Construction on more than 100 private housing projects, totalling 35,000 units, is in progress currently in Hong Kong, according to think tank Our Hong Kong Foundation.
The supply of construction materials from China has been affected because of the coronavirus outbreak. Photo: Bloomberg alt=The supply of construction materials from China has been affected because of the coronavirus outbreak. Photo: Bloomberg
Wheelock Properties said the 1,600-unit Malibu development has delayed from May to early August as the progress of construction has been affected by adverse conditions. Buyers of the 1,600-unit project are now likely to receive keys to their property at least two months late.
"We will try our best to finish the construction of Malibu as soon as possible and closely follow up the application for the Certificate of Compliance ... to minimise the delay," said Wheelock spokeswoman. The company has sold 1,575 units in the project worth more than HK$14.6 billion since March 2018.
Property buyers in Hong Kong have legal recourse to cancel deals and ask for full refunds along with interest if a developer cannot deliver a project six months after the expected or extended date of delivery, according to Residential Properties (First-hand Sales) Ordinance.
"It is a legal reason, or you may say, an excuse, to walk out of the contract," said Polly Chu, a partner at law firm Withers, noting those projects were sold at market peaks in 2018 and 2019.
Some 19 buyers of units in the L'aquatique in Tuen Mun have cancelled their deals after the developer MCC Real Estate delayed the delivery of the project twice. The mainland China based company was originally expected to deliver 198 flats, some as small as 281 square feet, to buyers in June last year.
MCC said the project will now be handed over to buyers in June or July this year because of issues with construction, delayed government approval of documents like Occupation Permit and late delivery of flooring tiles from mainland China factories because of the pandemic.
The company has fully refunded the 19 homebuyers along with interest, said Woody Kung, assistant sales manager at MCC.
Although Emperor International and Chevalier Group have both delayed the delivery of their projects, the impact on sales remains to be seen as these have not been put up for sale yet. Sales launches in recent weeks, including CK Asset Holdings' Seaside Sonata in Sham Shui Po, have flopped.
The completion date of Emperor's Seaside Castle luxury residential development comprising eight villas in Tuen Mun has postponed for six months from December 2019 to June.
"Because of impact of the pandemic, we are still waiting for the approval of Certificate of Compliance. So we need to delay it [sales]," an Emperor spokeswoman said.
Chevalier Group's 96-flat urban renewal project in Fuk Chak Street, Kowloon, has also been delayed by two months from September 2021 year to November.
Covid-19 has affected the progress of the project as is the case with "all construction sites and industries in Hong Kong", though the impact is limited, said David Seto, general manager of project development at Chevalier.
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.
Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.
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