Property sales launch called off at Aruna project in Ap Lei Chau, as Hong Kong developers cut prices
The first-round sales of a new residential development in Ap Lei Chau, priced more aggressively than other recent launches, were abruptly called off just hours before it was set to kick off on Saturday, as Hong Kong developers rush to release homes at lower prices ahead of anticipated interest rate hikes.
The Aruna project, developed by Chuang’s China Investments, had planned to offer 25 units ranging from 205 sq ft to 317 sq ft, priced between HK$5.31 million and HK$8.58 million (US$1.09 million) after discounts, or HK$25,945 to HK$27,498 per square foot, according to the original sales information.
Chuang’s China did not respond to a request for comment. Both Centaline Property Agency and Midland Realty, the sales agents for the apartment building, said the developer did not disclose the reason behind the sales cancellation.
Hong Kong’s weekend home sale sags amid looming supply
The rare move by Chuang’s China comes as Hong Kong developers race to offload flats at price levels not seen in five years amid weak demand and a burgeoning inventory of new homes.Henderson Land Development this week said it would offer the first batch of 148 flats in the 740-unit Henley Park in Kai Tak at an average of HK$21,088 per square foot after discounts. That is 15 per cent cheaper than leftover stock of new homes in the same district, according to Louis Chan, Asia-Pacific vice-chairman at Centaline Property Agency.
Star Properties in March gave out railway tickets valued at up to HK$11,000 each to the first six buyers of its After The Rain project in Yuen Long, while Grand Ming Group is handing out vouchers worth HK$8,800 to each of the first six buyers of its upcoming To Kwa Wan development called The Grands.Hong Kong developers cut prices to 2018 levels for new projects to boost sales
Homeowners are also putting up their flats for sale at a discount.
In the first five months of the year, 10.2 per cent of second-hand transactions in large-scale property developments were sold at a loss, up about 2 percentage points from the second half of 2022, according to data from Centaline. The average loss stood at 8 per cent.
Some homeowners have been “seizing the moment” to sell their properties as prices have gone up this year after last year’s plunge, contributing to the rise in discounted transactions, said Yeung Ming-yee, senior associate director at Centaline Property Research.
Expectations for further rate hikes are also weighing on the home market.
While the Hong Kong Monetary Authority last week kept the city’s base rate unchanged for the first time after 10 rounds of increase since March 2022, chief executive Eddie Yue Wai-man warned that the possibility for further rate hikes cannot be ruled out.With mortgage rates potentially rising to 4 per cent or more in the second half of 2023, some households are expected to rent rather than buy, which could push up the city’s residential rents by about 5 per cent for the whole year, according to a forecast by Bloomberg Intelligence.
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