Developers are coming up with more buyers’ sweeteners in an effort to offload completed Hong Kong residential projects since a tough new “vacancy tax” and other housing policies were unveiled at the end of June in an effort to raise supply.
The latest round of incentives include longer completion dates and payment periods, and the offer of expensive free holidays, to entice buyers to sign on the dotted line.
Chief Executive Carrie Lam Cheng Yuet-ngor said she hoped the new policies will shift more houses onto the market and within the price range of more buyers, in what is now considered the world’s least affordable housing market.
They include a tax on vacant flats to ensure the quicker release of completed flats. Developers will also be required to sell at least 20 per cent of the total number approved by the Lands Department in the presale consent, including those sold through tender.
To help them [developers] sell flats as soon as they are ready, developers are launching a wide array of discounts and gimmicks … apart from setting prices that match market prices
Thomas Lam, senior director at Knight Frank
Kerry Properties revealed a sales-completion arrangement on Monday of more than two years, or 738 days, for its vacant luxury 1,429-unit Mantin Heights development in Ho Man Tin, which had 300 flats unsold in April.
Under the “Super 738” financing scheme, buyers are only required to pay an initial deposit of 45 per cent of the flat’s value when they sign the sales-and-purchase agreement and then move in, before paying the balance by June 2020. During those 738 days, occupiers only need to pay government rates and management fees.
But Mantin’s sales-completion times are not the most generous to be offered in recent times.
CK Property Holdings Ltd (now CK Asset Holdings, the property conglomerate chaired by Victor Li), offered what is still considered the city’s longest financing plan, 12 years, in October two years ago with steep discounts of 24 per cent to buyers of its flats at The Zumurud in Man Tau Kok – a scheme largely credited as kick-starting the trend.
Sun Hung Kai Properties launched a similar plan for its Grand Yoho phase II development in Yuen Long, as did Henderson Land Development at its Double Cove in Ma On Shan and Wheelock Properties at the Grand Napa complex in Tuen Mun.
CK Asset unveiled free high-speed rail travel packages on Monday, worth HK$840,000 (US$107,000), to the first three buyers of its more expensive four-bedroom flats at the 1,436-unit Ocean Supreme development in Tsuen Wan, in a bid to sell off the last 11 units, and analysts say buyers can expect such promotions to become the norm in future as developers come under pressure to sell empty units quicker.
“The higher holding costs under the vacancy tax has made developers speed up sales. Flat supply is also becoming particularly high in certain districts,” said Thomas Lam, senior director at Knight Frank.
“To help them sell flats as soon as they are ready, developers are launching a wide array of discounts and gimmicks … apart from setting prices that match market prices.”
Lam, however, said offering more attractive mortgage or payment options would be more appealing to buyers than such handouts.
“What troubles buyers most is the loan-to-value ratio. If developers or other financial institutions can offer mortgages at higher loan-to-value ratios, that would help drive sales performances.
“Incentives such as travel packages and other gifts are more effective for cash-rich buyers,” Lam added.
“But most buyers are workers earning average salaries. What they need the most is help in securing a mortgage for buying a flat.”