Flat sales head for two-year high in HK

Flat sales head for two-year high
Published April 16th, 2007 in Investing, Real Estate and Hong Kong News.
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Sales of new apartments are expected to reach a near two-year high in April following a fifth consecutive monthly increase in March, industry observers say.

“Positive factors such as the ongoing mortgage rates battle between lenders and the government’s recent move to slash stamp duty for lower-priced flats will be reflected in this month’s Land Registry figures,” said Patrick Chow Moon-kit, head of research at Ricacorp Properties.

Sales and purchase agreements have to be lodged with the Land Registry during a 30-day window. So a particular month’s statistics generally reflect transactions the previous month.

Land Registry figures released last week showed that 8,039 residential units changed hands in March, an increase of 3 percent over February, the fifth straight month of increase since November.

Midland Realty chief analyst Buggle Lau Ka- fai attributed the increase to a 21-month high of 7,289 units registered from secondary market transactions. Fewer than 1,000 units were sold in the primary market last month.

Chow of Ricacorp expects the number of overall flat sales in April could jump by 25 percent month on month to reach a 22-month high of more than 10,000 units, boosted by new project launches and a revival of the secondary market.

New releases include Sun Hung Kai Properties’ (0016) The Vineyard in Yuen Long and its upscale Manhattan Hill in Lai Chi Kok, as well as Pacific Century Premium Developments’ (0432) phase six of its Bel-Air residential project at Cyberport in Pok Fu Lam.

Hong Kong sold 10,750 residential units in June 2005, when the market was active.

Chow expects residential sales in the primary market will more than double to more than 2,000 units this month compared with less than 1,000 units in March.

The number of transactions in the secondary market is likely to climb 13 percent month on month to more than 8,000 units this month, he said.

The improved secondary housing market lifted the number of overall residential property transactions by nearly a third in the first quarter, from a year earlier.

According to Land Registry figures, 23,328 units changed hands in the first quarter, up 31.6 percent over the same quarter of 2006, when the market was weighed down by rising interest rates.

Sales increased 12.7 percent compared with 20,696 units in the fourth quarter of 2006.

Chow said a revival of the secondary market offset a lack of new project launches in the first two months of this year.

New World Development (0017) managing director Henry Cheng Kar-shun said the lower- priced apartment market will be steady this year, while the robust luxury residential sector will continue to outperform other housing markets.

Chow said luxury residential property prices gained 8 percent in the first quarter of this year amid limited supply, adding that mass residential market prices rose 3.5 percent during the quarter.

Sales of new apartments climbed almost fourfold in the first quarter from a year ago as developers jumped on the sales bandwagon last month to capitalize on improving buyer sentiment.

Nearly 5,000 new residential apartments were sold in the quarter compared with more than 1,000 units in the same quarter of 2006, real estate agents said.

SHKP topped the sales table among major developers, offloading up to 2,100 flats fetching more than HK$9 billion in the first three months of the year.

Justin Chiu Kwok-hung, executive director of Cheung Kong, Hong Kong’s largest developer by sales last year, sold nearly 1,000 flats for HK$4 billion to HK$5 billion during the quarter, up 60 percent compared with the corresponding quarter last year.

PCPD reaped HK$5 billion to HK$6 billion from selling 350 luxury units at phase six of Bel- Air residences last month, Ricacorp has estimated.

Henderson Land Development (0012) and private developer Nan Fung Development each raked in about HK$900 million by disposing of about 400 apartments during the quarter.

After receiving the government’s pre-sale consent, developers can start releasing apartments to the market 20 months ahead of completion.

Developers do not book revenue from pre-sales of uncompleted flats until projects are complete.

Agents said Cheung Kong’s Central Park Towers residential development in Tin Shui Wai will be the major focus of market attention in the second quarter.

“The momentum will carry on to April and May but it may slow in June at the end of the quarter,” said Lau of Midland, referring to the start of the summer holiday season.

Developers are expected to release more new projects this quarter in the face of pent-up demand, Ricacorp said.

The agency firm estimates that up to 4,323 flats in 25 projects could go on sale, adding that the New Territories will account for most of the new supply with 2,131 units, followed by Kowloon with 1,574 and Hong Kong Island with 618.

The single biggest project is phase one of Central Park Towers with 1,902 flats in total.

Henderson Land is expected to offer 312 units in phase three of Metro Harbour View at Tai Kok Tsui, and another 326 in a mixed-use project in Cheung Sha Wan.

In the first quarter, sales were higher last month compared with the two preceding months, when most developers sat tight on project launches because they focused on clearing unsold inventory during the Lunar New Year holidays.

New projects which attracted encouraging market response last month included The Vineyard, Manhattan Hill and Bel-Air phase six.

H Cube, a residential project in Tsuen Wan by Nan Fung Development, was the only new project that came on the market in January.

SOURCE:HK Standard