26 July 2010

Sun Hung Kai to Sell 50 More Flats Following Demand

Business Week

Sun Hung Kai Properties Ltd., the world’s biggest developer by market value, will put another 50 luxury apartments up for sale in Hong Kong after buyers snapped up all 92 flats in a first batch of flats over the weekend.

The company sold the apartments at its Larvotto project at an average of about HK$40 million ($5.14 million) per unit, bringing in about HK$4 billion in revenue, Sun Hung Kai said in an e-mailed press release late yesterday. The new batch may go on sale in the middle of this week, it said, adding that their average sale prices may be 2 percent higher.

“The price is reasonable for properties of this quality,” Eva Yeung, an agent at Centaline Property Agency Ltd. who bought a HK$47 million-unit on behalf of a Hong Kong-based client, said outside the project’s showroom at the International Financial Center building in the Central business district on July 17.

Yeung said the luxury property market in Hong Kong will be supported by the lack of supply and increased demand from Chinese buyers. That may counter Hong Kong government efforts to curb a 38 percent surge in home prices since the beginning of 2009 amid concerns housing is becoming unaffordable.

About 20 percent of the buyers over the weekend were from mainland China, Sun Hung Kai said.

“Demand has exceeded supply,” Victor Lui, an executive director at Sun Hung Kai’s agency arm, said in the press release. “All of the units were sold within the first few hours after sales began.”

Robust Prices

Sun Hung Kai fell 0.3 percent to HK$111.50 at the 4 p.m. close of trading in Hong Kong. The Hang Seng Property Index that tracks the performance of seven Hong Kong developers dropped 0.4 percent.

Sun Hung Kai and partners Kerry Properties Ltd. and Paliburg Holdings Ltd. last week announced they were putting the apartments in the Ap Lei Chau district project up for sale for between HK$15,811 and HK$$22,500, a record for the district.

The second-hand market for Bel-Air, a luxury project in the nearby Pokfulam district, is selling for “similar prices” to Larvotto, according to Buggle Lau, chief analyst at property agency Midland Holdings Ltd. New developments in the area will probably sell at a minimum of HK$15,000 a square feet, he said.

Luxury residential prices in the Island South district, which includes Repulse Bay and Stanley areas, grew 2.5 percent in the second quarter, after rising by nearly 35 percent in the previous nine months, according to property consultant Knight Frank LLP. Luxury homes are those at least 1,000 square feet (93 square meters) or costing at least HK$10 million.


Apartments at Larvotto will be around 1,500 to 2,500 square feet. Larvotto is the name of the main public beach in Monaco.

Larvotto has 715 units. Hong Kong developers sell units in developments in batches instead of offering them all at once, to gauge demand and take advantage of rising prices.

Hong Kong authorities have introduced rules on new home sales and are investigating canceled sales at a Henderson Land Development Co. luxury apartment project.

Henderson last month canceled 20 transactions at its 39 Conduit Road project in the city’s Mid-Levels district, including the one the company claimed would fetch a record HK$88,000 a square foot, prompting lawmakers to call for an investigation.

The city’s Legislative Council on July 12 held its first special meeting to discuss the collapsed sales, which were worth HK$2.67 billion according to Henderson.

Since last year Hong Kong has raised the requirement for down payments on luxury homes and cracked down on misleading marketing by developers, including the use of show flats, after officials expressed concern that prices were rising too fast.

Hong Kong builders often sell apartments before they are completed, enticing customers by showing walk-through models of the homes.

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