Developers offering discounts to new home buyers in Hong Kong
Developers in Hong Kong are continuing to launch new residential projects with incentives which are proving attractive to buyers, especially first time buyers, according to the latest monthly residential report.
They are successfully luring buyers with discounts and low down payments, says the report from international real estate consultants Knight Frank.
This has resulted in an enthusiastic response from first time buyers and competitive pricing strategies are putting pressure on secondary home sellers, the report says.
As example is the first batch of units at Trinity Towers in Sham Shui Po offered with discounts leading to the entire batch reportedly sold within four hours of launch.
It also means that secondary home sellers have become less aggressive with asking prices and more flexible during price negotiation.
This resulted in signs of revival in the market in early March, but by the middle of March, the US Federal Reserve hinted that interest rates could start to be raised in early 2015, and potential buyers became more cautious n the second half of the month.
The report also says that a combination of rising construction costs, declining property prices and the government’s aim to increase residential supply resulted in conservative bids by developers on residential sites.
For example, all seven bids for a luxury residential site in Tai Po fell short of the government’s reserve price. More evidence of this came from the acquisition of a residential plot in Ma On Shan by Sun Hung Kai Properties for HK$1.83 billion, some 18% less than that raised by a similar site nearby, tendered in late 2012.
‘Looking forward, we expect keen competition in the primary market. Developers are expected to accelerate the pace of release of units and to continue offering sweeteners, due to the possible earlier than expected rise in the US interest rate,’ the report explains.
‘However, interest rates are expected to remain low in 2014 and supply to remain limited, and residential prices are not expected to experience sharp falls this year,’ it adds.