Sun Hung Kai offers steep discount for units at new Yuen Long project with abundant supply due in near future

Hong Kong's secondary homes market has come under pressure after Sun Hung Kai Properties (SHKP) - one of the city's major developers - offered a hefty discount for an apartment at one of its newly launched residential projects in Yuen Long.

The 514-square-foot apartment at Grand Yoho is being offered for about HK$5.3 million, or HK$9,931 per square foot - about 10 percent lower than the prices of units at one of the developer's earlier projects - the adjacent Yoho Town - where apartments are being sold at an average of HK$11,030 per square foot.

The launch of Grand Yoho - a middle-class residential complex - comes as the local real estate market, particularly the secondary sector, shows signs of picking up after a lengthy period in the doldrums.

Housing experts believe that SHKP's move reflects developers' eagerness to rush sales, with an abundant homes supply slated to come on stream over the next few years, coupled with an uncertain global economic outlook and the prospect of a fresh hike in US interest rates early next year.

However, they ruled out any drastic drop in homes prices as residential sites are unlikely to be cheaper even if more land goes under the hammer.

The unit offered at a 10-percent discount is on the seventh floor of Block 2 at Grand Yoho, where the first batch of 226 units went on sale on Thursday.

Other units, ranging from 514 to 774 square feet, are also going at discounted prices - from HK$5.29 million to HK$11.09 million each.

"It will certainly lure potential homes buyers away from the secondary market," said Sammy Po Siu-ming, chief executive of Midland Realty's residential market.

In its latest research report, global real estate advisory firm Jones Lang LaSalle predicted that developers are likely to slash prices in view of the surge in launches of large-scale projects.

"This will heap pressure on secondary homes owners to cut prices and lock in gains," it said.

Victor Lui Ting, deputy managing director of SHKP, said the company expects to rake in HK$1.9 billion if all the units at Grand Yoho are snapped up.

Market experts say builders have been stepping up sales in order to lock in gains as soon as possible, with the prospect of increased land supply, especially in the New Territories, that will dent property prices.

By offering steep discounts, developers also hope to lure more buyers who have been sitting on the sidelines.

According to the Transport and Housing Bureau, the supply of apartments over the next three to four years will reach 93,000 units, heightening chances of homes prices coming under further strain.

Earlier this month, Secretary for Development Paul Chan Mo-po urged potential homes buyers to be prudent amid a tug-of-war between sellers and purchasers.

Other market experts, however, have adopted a more optimistic tone.

"Prices of residential land sites are not expected to fall even if more land is auctioned," said Jonas Kan Kwok-yu, head of Hong Kong and Chinese mainland property research at Daiwa Capital Markets.

"We believe the new demand being created by mainland developers will be sufficient to absorb the additional supply from the government. And, we think there are more mainland developers which can afford to invest a few billion dollars in Hong Kong's property market," he said.

oswald@chinadailyhk.com

(HK Edition 08/19/2016 page12)