A 57 per cent price rise in the second launch of flats at a project of former Sun Hung Kai Properties chairman Walter Kwok Ping-sheung deterred buyers on Saturday (March 11), with just four out of 42 selling by 6pm.
The first apartments released at Alto Residences in October averaged HK$13,237 per sq ft after discounts. But the latest batch average HK$20,797 - a record high in Tseung Kwan O - after factoring in a 12.75 per cent discount.
The most expensive transaction was a 770 sq ft flat that sold for HK$18.86 million.
"The weak sales are mainly due to the sharp price rise. The inflated prices seem unacceptable to potential buyers" Sammy Po, chief executive of Midland Realty's residential department, said. "Prospective buyers have more choices now because other major developers are offering new flats to lock in buyer interest.â€ Alto Residences was jointly developed by Empire Group Holdings, owned by Kwok, and Lai Sun Development.
Hong Kong's three major developers - Cheung Kong Property, Sun Hung Kai Properties and Wheelock Properties - unveiled prices for their latest projects, comprising a total of 2,408 flats, last Thursday.
Cheung Kong said its first batch of 93 flats at the 454-unit Seanorama in Ma On Shan would cost an average of HK$13,961 per sq ft after a discount of as much as 24 per cent.
At SHKP's 1,050-flat Cullinan West, atop West Rail's Nam Cheong Station, the first 210 apartments averaged HK$18,998 per sq ft after a discount of 22 per cent. Wheelock Properties' first 186 flats at its Monterey project in Tseung Kwan O were listed at an average of HK$14,208 per sq ft after a 17.5 per cent discount.
The price lists were rushed out ahead of March 15, when the US Federal Reserve is likely to raise interest rates, which could hit property prices in Hong Kong. Home prices in Hong Kong, the least affordable city in the world, rose 10.75 percent last year.
"I do not think the hot house market will be negatively impacted by a rate hike of 0.25 percent in the US as the news has already been digested by markets" Po said. "Hong Kong does not necessarily follow the rate hike cycle to increase its rate early this year.â€
Alfred Lau, a property analyst at Bocom International, said the Hong Kong market would remain hot, driven by aggressive bidding from mainland Chinese developers, especially in the Kai Tak area.
On February 24, Shenzhen-based Logan Property Holdings and Guangzhou's KWG Property Holdings won the bidding for a residential site in Ap Lei Chau for a record HK$16.86 billion or HK$22,118 per sq ft.
Later, the MTR Corp awarded a residential project at Wong Chuk Hang Station, valued at HK$8 billion to HK$9.8 billion, to Pingan Real Estate Capital and Road King Infrastructure.
"The fierce competition from Chinese developers will heat up the Hong Kong property market" Po said. "The violent bidding is like pouring oil on a flame.â€