Sun Hung Kai offers 421 flats in Kennedy Town and Central for rent, offering help to ease housing shortage as vacancy tax kicks in

Martin Choi and Lam Ka-sing
December 10, 2019 11:39 AM SGT
Sun Hung Kai Properties, Hong Kong's largest developer, is offering 421 flats for lease with terms as short as one month to cater for the younger population ahead of the impending vacancy tax to stop developers hoarding empty units.
The apartments are located in Kennedy Town in the western district of Hong Kong Island and near Central, and are aimed at younger professionals and expatriates on short-term stays in the city. Townplace Kennedy Town, formerly known as The Kennedy on Belcher's, was launched last year while Townplace Soho is scheduled for launch in the first quarter of next year.
A total of 421 units will be available for rent at the two projects, ranging from studio flats to four-bedroom apartments with saleable area starting from 286 square feet, going up to 1,092 sq ft (101.4 square metres). The minimum leasing term is one month, and yearly leasing plans are also offered.
The launch comes as Hong Kong average residential rents have declined for three straight months to HK$36.39 per sq ft in October, according to Ricacorp Properties. Home prices are also projected to drop by 5 per cent next year, according to Knight Frank.
Sun Hung Kai is resorting to such a strategy to avoid a vacancy tax that may be implemented as soon as this month, said Sam Chi-yung, strategist at Springwaters Financial Securities, adding that the city's technical recession may also prompt the developer to adjust its sales and leasing strategy.
"If it cannot sell it early enough, it will really be levied" the vacancy tax, said Sam. "The market isn't so good now. The leases used to be longer. If one tenant leaves, it takes time and resources to find another. Such will affect income. But maybe because of the market sentiment, it is even willing to offer short lease."
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The developer said the projects released for lease was not related to the vacancy tax. The government plans to impose a vacancy tax on developers to stop them from hoarding completed but unsold property, and to ease the city's housing shortage.
"In the short term, we have not seen much impact from the protests on leasing terms, but we will continue to monitor the situation," said Belinda Kuan, general manager of Signature Homes, the luxury residential leasing arm of SHKP who oversees the new brand.
More than HK$200 million in rental revenue was expected from the project, and rental prices will be announced at a later date, Kuan said. The anti-government protests since June that are driving Hong Kong's economy into its first recession in a decade have not had much impact on the rental performance of the developer's property which has been relatively stable, she added.
Rents of relatively new medium-sized flats in Kennedy Town range from HK$20,000 to HK$40,000 per month, or HK$40 to HK$50 per sq ft, said Kelvin Yee, account manager of Century 21 Richfield in Kennedy Town.
"Many flats are relatively old. But accessibility has improved after the opening of MTR station," said Yee. "As it is not far away, it is an option for those who work in Central."
Kennedy Town has ample supply of leasing supply of about 50 listings now but there is no new supply, Yee added. Relatively new developments in Kennedy Town include Imperial Kennedy, Cadogan, Lexington Hill and The Hudson.
In Soho, rental charges range from HK$25,000 to HK$40,000 a month, or about HK$55 per sq ft, said Yee. Recent developments include Centrestage, Centre Point, with new supply from My Central.
Rent in these two districts could fall about 5 per cent in two months as the off-season of leasing during Christmas and the Lunar New Year is coming, Yee said.
The overall leasing market has slid for three straight months already, with the average rent per sq ft sinking to a seven-month low of HK$36.39 in October, according to Ricacorp.
Park Avenue in western Mong Kok had the biggest slump on month at 8.9 per cent to HK$44.5 per sq ft in October.
"The [protests] have caused some universities to end their semesters earlier, and more students from mainland [China] have quit their leases, making the rental market more quiet," said Derek Chan, head of research at Ricacorp.
"In addition, the [Hong Kong government] relaxed mortgage requirements for first-time buyers, which [help] some users who had planned to rent a home to find bargains in the transaction," Chan said. "The situation is expected to be more clearly reflected in November and December."
Sun Hung Kai Properties will also launch the Wetland Seasons Park project in Tin Shui Wai before Christmas. Mainland developer China Evergrande also launched 86 flats in its new The Vertex project in Cheung Sha Wan on Thursday.
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.
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