New home prices in Lohas Park decouple from soaring land premium amid abundant supply

By Lam Ka-sing kasing.lam@scmp.com / https://www.scmp.com/property/hong-kong-china/article/3009086/new-home-prices-lohas-park-decouple-soaring-land-premium?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | May 8, 2019 11:48 AM SGT
Prices of new flats in Lohas Park in Tseung Kwan O have fallen to near 2017 levels despite soaring land costs in the area, contradicting a strong recovery in the world's most expensive property market.
Late last month, Wheelock Properties released flats at its Montara project at a steeper than usual discounts to woo buyers. The move came a day after MTR Corp on April 25 awarded the 11th phase of development at Lohas Park, in which land premium paid to the government surged to a record HK$3,194 (US$407) per square foot, to a consortium including Sino Land.
At the same time, prices of pre-owned flats at Lohas Park have risen 0.8 per cent month on month in April to HK$11,974 per sq ft, according to data from Centaline Property Agency.
Alex Leung, senior director at CHFT Advisory and Appraisal, said the decoupling of land costs and selling prices will be more profound in areas with abundant supply.
"[The relatively low price] is due to direct competition between various developers," said Leung.
He added that developers would rather sell quickly to recover their investment because even if they are able to sell at higher prices later, they cannot pocket all the gains as they have to share the profit with MTR Corp.
About 8,630 units will be available for sale in phase eight to 13 in Lohas Park " a major source of flats in the city over the next several years.
Buyers quickly snapped up all 500 flats on offer at Wheelock Properties' Montara development on May 4. Photo: Edmond So.
Lohas Park, in the New Territories, will be the city's largest residential enclave with an estimated 58,000 residents in 21,500 flats, when the project is completed in 2025.
Lee Shu-kam, associate head of the department of economics and finance at Shue Yan University, said that developers...