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Tai Wai launch is test of market's mood

HONG KONG: The upcoming launch of the second phase of flat sales at Cheung Kong's Festival City project above the Tai Wai MTR station will provide the first test of market sentiment since last month's annual policy address by Chief Executive Donald Tsang Yam-kuen.

Early signs are that since the release of a list of slightly discounted prices, enthusiastic would-be buyers are already queuing up.

"It's conveniently located on the top of the Tai Wai MTR station, so I think it has potential," said Mary Wong after viewing the show flats.

Wong and her husband, who live in Taikoo Shing, are considering spending at least HK$8.4 million (RM3.39 million) for a flat in the development, which is expected to be completed in October.

"The prices are reasonable and have potential to grow," said Wong.

That sentiment was shared by others to whom the South China Morning Post spoke, as well as sales agents and analysts, who forecast strong demand.

"With a slower secondary market, we expect pent-up demand to shift towards the primary market, benefiting developers with upcoming launches, including Cheung Kong and Sun Hung Kai Properties," wrote Samsung Securities analyst Lee Wee Liat in his latest report "Hong Kong property: All eyes on Festival City".

On Thursday, Nov 11, Cheung Kong released the price list for 108 flats it will offer to begin the second phase of sales; the average asking price is HK$8,326 per sq ft for cash buyers. That is 4.2% below the average price of HK$8,692 per sq ft at which flats were bought in the first phase of sales in March.

It followed up this list two days later by unveiling prices for two more batches, of 108 and 119 flats, at slightly higher average prices of HK$8,456 and HK$8,566 per sq ft respectively.

Prices for three- and four-bedroom flats, which range in size from 874 sq ft to 1,275 sq ft, will come to between HK$7.5 million and HK$12.7 million.

Cash buyers can enjoy a 5% discount on these prices. The official launch is expected soon.

"I don't think the flats are expensive," Wong said. She is still confident about the market outlook despite property prices having already risen significantly.

Overall, home prices in the secondary market have jumped 52.22% since January last year, according to the Centaline Property Agency.

Flats in Taikoo Shing are currently selling at an average of HK$8,316 per sq ft on the secondary market, according to Centaline.

Wong said they were now seeking a flat of about 1,000 sq ft in the new project for their own use.

Festival City is a joint project of Cheung Kong and the MTR Corporation. They will offer 1,368 flats for sale in the second phase. The development comprises 4,328 flats.

Home seekers seem to be upbeat about the market and the outlook for property prices in the new estate, since at least 500 potential buyers have written cheques backing their expressions of interest, said Sammy Po Siu-ming at Midland Realty.

"We have seen a group of flat owners move into the Sha Tin district in the past decade and they now want to move into larger flats like those in Festival City," Po said.

But he said short- and medium-term investors might shun the project this time because many had their capital tied up, since around 2,400 new flats in the district — including those in the first phase of Festival City and Cheung Kong's Oceanaire at Ma On Shan — sold out this year.

Ricacorp Properties' head of research Patrick Chow Moon-kit said prices were lower this time because flats in the second phase were not as close to the MTR station as those in phase one.

Some of the flats in phase two may also look out on crematorium and columbarium facilities on Sha Tin Heights on the western side of the development, and some buyers might not want such a view, agents said.

Argus Mak Sing-fai, Centaline Property Agency's sales director for the Sha Tin district, expects Festival City 2 to record strong sales because the owners who bought flats in the first phase of sales are asking HK$9,000 to HK$12,000 per sq ft on the secondary market.

Samsung's Lee said owners were adamant about achieving their asking prices because of the second round of quantitative easing by the US Federal Reserve. That resolve was reflected in the decline in secondary-home transactions last week compared with the week before that.

A total of 482 home sales in the secondary market were recorded from November 8 to 14 in the 50 major housing estates monitored by Ricacorp Properties, down 1% on the previous week and the lowest result in the last five weeks.

Swire Properties plans to launch the first batch of 51 flats at its 126-unit Azura in Mid-Levels on Saturday. The flats range in size from 1,650 sq ft to 2,100 sq ft, and the average price is HK$22,288 per sq ft.

Other potential new launches in the coming months include SHKP's Avignon, which comprises 459 flats.

Kelvin Lau Kin-hang, a regional economist at Standard Chartered Bank, says asset prices — including property — could rise because of low interest rates, hot money, and higher purchasing power due to a better economy. — South China Morning Post
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