Sun Hung Kai sells Hong Kong homes for HK$4.2 billion

HONG KONG: Sun Hung Kai Properties Ltd sold a batch of 900 homes in Hong Kong for HK$4.2 billion (RM1.84 Billion) at a new development over the weekend amid crowds of thousands, fuelling speculation the city’s housing market is overheating.

The apartments at the Yoho Midtown apartment complex in Yuen Long sold for an average HK$5,400 per sq ft, Amy Teo, project director at the world’s biggest property developer by market value, said in an interview. That compares with an average HK$3,000 per sq ft for new homes in the area a year ago, according to Wong Leung-sing, an associate director at Centaline Property Agency Ltd.

Hong Kong’s home prices surged 29% in 2009 as low interest rates and an increase in buying by mainland Chinese stoked demand. Norman Chan, chief executive of the Hong Kong Monetary Authority, told lawmakers Feb 1 that the city faces a “huge” potential risk of bubbles forming in its asset markets given high liquidity. The city was the world’s fastest-growing major housing market last year, according to a survey compiled by real-estate agents Knight Frank LLP.

“The property market in Hong Kong is still hot, especially for new properties,” said Ng Sinwa, an estate agent at Midland Realty who joined the crowds queuing to view the show homes. “People are still keen to buy.”

Some 120,000 prospective buyers have flocked to the show homes since Feb 19, Teo said, speaking at the display properties set up in a shopping centre near the apartment complex in the city’s northern New Territories. Sun Hung Kai increased the number of apartments on sale to 900 from 700 because of demand, she said. The building complex has a total of 1,890 homes, according to Teo.

“I’m excited to buy, but I think it’s a little overpriced,” said Nelson Ma, 36, a worker at an export company who had just put down a deposit on a HK$3.4 million, 650 sq ft, two-bedroom apartment. “I think there is a bit of a bubble but I’m not too worried as I will be living in the apartment rather than buying it as an investment,” he said.

Sun Hung Kai estimates about 80% of the purchasers intend to live in the apartments, with the remainder acquiring the properties as an investment, Sun Hung Kai spokeswoman Vivian Kwok said.

About 40 units were immediately advertised for resale at asking prices of as much as 20% more than the original costs of purchase, the South China Morning Post newspaper reported, citing property agents.

Not all prospective buyers were sold on the properties available. “It’s so expensive,” Ivy Sze said, looking at the show homes on display. “It’s a bubble. We just don’t know whether prices will go up more, or just go ‘pop’,” she said. “We want somewhere to live so we just have to keep looking.”

The number of private homes completed in Hong Kong last year fell 18% to 7,200 units, the lowest since 1997, the government said in a report Jan 22.

The city’s government is holding its first land auction of the year on Feb 22 in the Tseung Kwan O area to try to ease the shortage of supply, with price estimates for the site range from HK$2.6 billion to HK$3.4 billion.

The city’s home sales continued to rise in January, more than doubling in value from a year earlier to HK$36.2 billion, according to figures released by the government’s land registry. Sales gained 4.1% last month from December, the agency said. – Bloomberg LP