Flat prices edge up to 1997 levels

Just months after government measures dampened enthusiasm for flat-buying, the market is roaring back — so much so that some properties are back to 1997 levels.

Taking advantage of the upturn in sentiment, developers will release nearly HK$4 billion (RM1.65 billion) worth of flats this weekend.

Sales and prices have improved since Sun Hung Kai Properties paid a higher than expected HK$10.9 billion for a site in Ho Man Tin early last month. New rules requiring greater transparency in developers' price lists have also helped sentiment.

The number of weekly property transactions has rebounded to 300 from 180 in April and home prices have started to edge up.

More than half of the 964 flats at The Hermitage in Tai Kok Tsui — the first project launched under new guidelines issued by the government — were sold within a week.

Under the rules, developers must release price lists three days before flats go on sale to allow homebuyers time to study prices. Previously, developers released some prices 24 hours before the launch of a sale, leading to accusations they were manipulating prices.

Last week, a 393 sq ft flat at City One, Sha Tin, changed hands for HK$1.85 million or HK$4,673 per sq ft — 8% higher than the vendor bought it for in 1997.

"It probably shows the market correction has come to an end," Eric Yuen Chi-fung, head of research at Guoco Capital, said.

Yuen said the developers' less aggressive pricing strategies had also encouraged buyer interest. "The market is still dominated by local buyers and they will return when projects are offered at a reasonable level," he said, adding that mainlanders accounted for about 10 to 20% of total sales.

Prices of the first batch of flats at The Hermitage were released at an average of HK$11,000 per square foot.

"The good sales response has removed earlier concerns that the new guidelines could dampen buying interest," Midland Realty chief analyst Buggle Lau Ka-fai said. "The strong sales response reflects that buyers remain bullish."

Sun Hung Kai Properties plans to release all 377 flats at Lime Stardom, a joint venture housing project with the Urban Renewal Authority, in Tai Kok Tsui at an average of HK$8,045 per sq ft on Saturday, July 10. The flats, ranging from 345 sq ft to 1,058 sq ft, are worth more than HK$1.7 billion.

"It is unusual for a developer to release all units in one go," one agent said. "Potential buyers will have more time to study the price list."

Separately, Sino Land will release an additional 120 properties, worth about HK$1.7 billion, at The Hermitage, at an average of HK$11,637 per sq ft on Saturday.

Henderson Land Development will also release 16 villas at Legende Royale, the phase three development at The Beverly Hills in Tai Po at HK$7,935 per sq ft as early as Friday.

The total value of the 16 villas, from HK$23 million to HK$47 million, will be about HK$500 million.

Lau said low interest rates and an attractive rental return had also lured investors. — South China Morning Post
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