Hong Kong’s property buyers spurned a 12 per cent discount on offer at a waterfront housing project in one of the city’s choicest locations, signalling more woes ahead for the real estate slump.
Agents sold a single flat at the first phase of the Miami Quay project in Kai Tak, out of the 50 units left over from its September 2022 launch. The flats were priced between HK$5.8 million (US$742,215) and HK$18.9 million, after an average discount of 12 per cent.
“It was a bit disappointing,” said Sammy Po Siu-ming, the residential division chief executive of Midland Realty, which runs one of Hong Kong’s largest networks of property sales agents. “The flats are leftover units and expectations were not high given the current weak market sentiment.”
The woeful result underscores how Hong Kong’s developers have to make deep cuts to their catalogue prices to clear their growing inventory of unsold homes, as investors and owner-dwellers alike have retreated to the sidelines amid stubbornly high interest rates and a supply glut.
Hong Kong’s had more than 20,000 unsold homes in February when the government scrapped a range of taxes and curbs to stimulate demand. Since then, the US Federal Reserve had pushed back its schedule for cutting interest rates, resulting in Hong Kong’s high funding costs because of the city’s currency peg, analysts said.
Recent launches had to cut prices by as much as 10 per cent, compared with similar projects in 2015, according to JLL.
Phase one of Miami Quay is a venture between several of Hong Kong’s biggest developers: Wheelock Properties, Henderson Land, New World Development and the Empire Group. Sited on the former runway of the Kai Tak airport, the location offers unhindered waterfront views of the West Kowloon district and the famous LionRock in Kowloon.
Developers had to offer steep discounts elsewhere in Kai Tak to bolster sales. New World and Far East Consortium this week cut the lowest price of the first 60 flats at the Pavilia Forest I project to an eight-year low, or HK$16,008 per square foot, with discounts of up to 18 per cent from the prices of new launches in the same neighbourhood, according to Midland.
Some local developers are using cash rebates as stealth discounts to draw buyers.
The Sales of First-hand Residential Properties Authority (SRPA) said it had noticed that some developers were offering very high commissions to property agents to boost the sales of new homes, while agents were passing on such rebates to their clients.
Cash rebates – a form of under-the-table discounting through private negotiation – to attract buyers – can reach as much as 50 per cent of the value of a new property.
