CK Asset Holdings, the property flagship of Hong Kong billionaire Li Ka-shing, will sell out the 626 available units at its Coast Line II development in Kowloon on Saturday after homebuyers jumped at the chance to snap up new flats at the lowest prices in recent memory.
The units in phase II of the Yau Tong project are priced at HK$14,686 (US$1,880) per square foot on average after discounts, which is a seven-year low for new flats in the city, according to Raymond Cheng, managing director of property management at CGS-CIMB Securities.
More than 13,000 prospective buyers have deposited cheques in hopes of buying the flats at the sale, which CK Asset expanded over the last two days from 254 units to 382 and finally to 626 given the demand.
With the aggressive discounting, CK Asset appears to be kicking off a price war that will see developers offering bigger discounts for new launches in the third quarter, according to Buggle Lau Ka-fai, chief strategist at Midland Reality.
Developers have been discounting flat prices by 1 per cent to 3 per cent below market levels since the third quarter of last year, said Lau, who anticipates that developers will price new units at 10 per cent below market levels in the third quarter as they strive to attract buyers and stimulate sales.
The cheapest flat at Coast Line II, which lies about 10 minutes from an MTR station in the southeastern corner of Kowloon, is a 210 sq ft studio on offer for HK$2.9 million, or HK$13,810 per sq ft, after an 18 per cent discount. The expected sale proceeds from the 626 units are HK$4.67 billion.
An on-site lottery on Saturday morning at Fortune Metropolis in Hung Hom will decide which of the 13,000 hopefuls get to buy flats.
Meanwhile, falling prices in the primary market are depressing sales in the secondary market, Lau said, as homeowners have to cut their asking prices to draw buying interest.
Ricacorp Properties recorded only four secondary-market sales across the city over the weekend – one better than the previous weekend. Midland Realty also recorded four sales, and Centaline Property had just three deals.
Sammy Po Siu-ming, CEO of Midland Realty’s residential division for Hong Kong and Macau, said secondary transactions will continue to hover at a low level.
“The purchasing power of buyers is seriously skewed, and the overall property market has become polarised, busy in the primary market and quiet in the secondary market,” Po said.
Hong Kong’s property market has cooled as high interest rates weigh on buyer sentiment. Two recent project launches – La Montague in Wong Chuk Hang and High Park I in Yuen Long – received only lukewarm interest.
Meanwhile, the number of unsold units in completed projects is the highest since 2007, according to JLL, which said a total of 83,000 housing units are available in Hong Kong, with 18,000 in completed projects and the rest under construction. About 25,000 more units are expected to hit the market in 2023.