Sales at a new residential project on Hong Kong Island petered out after starting briskly despite the developer pricing the flats 20 per cent cheaper than a property launched in the same neighbourhood three years ago.
Right Honour Investments, the developers of The Highline, eventually sold 43 of the 78 units available in the first batch on Wednesday, according to Midland Realty, the project’s sole agent. A total of 306 buyers had preregistered for the flats.
The units comprised studios, and one and two-bedroom flats, with areas ranging from 211 to 524 sq ft. They were priced from HK$3.88 million (US$497,000) to HK$14.68 million, or HK$18,405 to HK$28,021 per square foot.
The average price was HK$22,719.
The developer, a unit of Shanghai Commercial Bank, surprised the market by pricing the project some 18 per cent lower than the prevailing rate of about HK$26,000 per square foot in the area, according to Midland Realty.
It was also more than 20 per cent lower than the first batch of flats in Kennedy 38 launched in November 2021, according to the property agency.
Two of the three units that were put up for tender were also sold, according to Sammy Po, CEO of Midland Realty’s residential division for Hong Kong and Macau.
The Highline has attracted a larger proportion of investors than many other new developments, Po said, estimating it to be about 50 per cent. He expects rents for the flat to be HK$50 per square foot, giving a rental return of about 4 per cent.
Since the removal of the property cooling measures in late February, mainland Chinese homebuyers have become active in Hong Kong’s property market, he added, noting that they accounted for 40 per cent of the prospective buyers for new flats.
The upbeat sales at The Highline were in stark contrast to The Haddon launched on Tuesday. Henderson Land only managed to sell 13 of the 63 units in the 453-unit project in Hung Hom, according to a property agent.
Po said transactions in both the primary and secondary residential markets have slowed down, with prospective buyers returning to a wait-and-see mode as the interest rate outlook remains unclear.
The Hong Kong Monetary Authority will announce its rate decision on Thursday morning, after the US Federal Reserve’s decision on Wednesday night Hong Kong time. Although no rate change is expected at the meeting, more traders expect the Fed to cut rates twice in the remainder of 2024, according to CME Group.
In the primary market, transactions jumped significantly after the government removed the property curbs. A total of 4,141 new residential units were sold in March, compared with 262 in February, according to data provider Dataelements, which tracks new residential properties in Hong Kong. The number dropped by more than 50 per cent to 1,880 units in April and slid a further 32 per cent to 1,273 in May.
Secondary-market transactions have also slowed, from 5,350 in March to 4,500 in April. Analysts expect the number to drop further to 3,000 in May.