Hong Kong developers keep pricing flats to move amid supply glut, high rates

Hong Kong developers continue to rely on attractive pricing as a strategy to clear their swollen stock as interest-rate cuts and a stronger economic recovery fail to materialise, according to analysts and the latest price lists for sales that are soon to launch.

New price lists for New World Development (NWD) and Far East Consortium’s Pavilia Forest III project in Kai Tak and Early Light International Holdings’ The Uppland in Tuen Mun both have average prices per square foot well below recent launches in nearby developments – by more than a third for Pavilia Forest III and 10 per cent for The Uppland.

“It’s definitely a buyers’ market now,” said Martin Wong, senior director and head of research and consultancy for Greater China at Knight Frank. “Currently, price cuts are the most effective way to drive sales, as buyers have many options.”

The supply of new flats in Hong Kong is expected to hit 112,000 in the next three to four years, according to a Housing Bureau estimate in March – marking the second straight quarter where the number hit a record high. Demand, meanwhile, is being smothered under interest rates that remain at a 23 year high and an economy that slowed to 2.7 per cent growth in the first three months of the year from 4.3 per cent in the preceding quarter.

NWD and Far East Consortium announced over the weekend that they will sell the cheapest 72 units in Tower 1 of Pavilia Forest III in Kai Tak at a discounted price of HK$16,438 (US$2,105) per square foot. That means the average price of the units in the tower, called Azure Forest, undercuts by more than a third the April 2022 average price of HK$24,833 per square foot for the first units at the nearby Monaco Marine project.

The 72 listed units – 30 one-bedroom units, 35 two-bedroom flats and seven three-bedrooms units – range from 260 to 666 sq ft, and the price range spans from HK$4.27 million to HK$13.89 million after discounts.

Azure Forest offers 264 units overall and will be the first tower in the Kai Tak residential area with a sea view, according to the developers.

The initial units on offer, ranging from 234 to 512 sq ft, were priced from HK$3.86 million to HK$9.87 million. As of Monday, 185 units have found buyers, according to NWD.

The developer, controlled by billionaire “toy king” Francis Choi Chee-ming, issued a price list for 80 units on Monday, with an average price of HK$10,686 per square foot.

That represents a 9.8 per cent reduction from the average price of HK$11,854 per square foot for 160 units put on sale in June by Sun Hung Kai Properties in its Novo Land project, which is also in Tuen Mun. The Novo Land flats were themselves priced as much as 17 per cent below previous launches in the district.

The new batch of flats in The Uppland comprises 43 studios, 32 two-bedroom units, and five three-bedroom units. Prices start at HK$1.9 million, according to Raymond Lee, managing director at Early Light.

“The project received more than 4,000 subscriptions last weekend, showing the strong demand for the property,” said Leo Koo Kam Poo, the developer’s sales and marketing manager. “Buyers are mainly from the New Territories, with 70 per cent of them end users and the rest for investment.”

Compared with the previous price list, the average price for the latest list is nearly 7 per cent higher.

“Developers increase prices based on the market response,” said Derek Chan, head of research at Ricacorp Properties. “When the first batch of sales is satisfactory, they will try to increase prices slightly. However, the risk is that the sales may slow down, so a careful balance is required.”