The controlling family behind Sun Hung Kai Properties has managed to offer starter homes in East London in the form of 400 square foot studio flats beginning for as little as HK$4 million (US$509,606), or roughly a 37.5 per cent discount to similar properties on offer in urban districts of Hong Kong.
Kwok Family Interests holds a 50 per cent stake in the residential development Goodluck Hope, which is set for the sales launch of its second phase in Hong Kong and London on Friday. Prices in the project, which is being developed in partnership with Ireland’s Ballymore Group, are set to rise by 3 to 5 per cent increase from the first phase.
The second phase of the development, known as The Douglas Tower, is a 30-storey high-rise featuring 165 units in layouts that include studio, one bedroom and two-bedroom flats, plus two loft penthouses. The first phase featured low-rise units that were launched for pre-sale in Hong Kong on June 16, 2017. The 85 per cent of the units made available have been sold, while the remaining 15 per cent are set to go on the market at a date closer to completion. Goodluck Hope is the largest residential project undertaken in London by the Kwok Family Interests since the Brexit vote in June 2016.
Units at The Douglas Tower will start at £902 per square foot (US$1,160), with the smallest 403 sq ft studio flats priced from £395,000, and the most expensive, a loft penthouse that spans 1,734 sq ft, set for £1.675 million.
Jenny Steen, sales director at Ballymore, said prices for Goodluck Hope’s phase two have risen 3 to 5 per cent compared to the first phase, where pre-sale units were priced from £803 per sq ft. The price hike is most significant for the entry-level studio units, which will rise 12 per cent, due to waterfront views.
Meanwhile, prospective Hong Kong homebuyers have few options to get on the housing ladder for around HK$4 million when buying in a new building.
About the cheapest units on offer in the city are tiny 270 sq ft studios in Sham Shui Po’s Cullinan West II, a project also developed by Sun Hung Kai Properties, where a unit sold for HK$6.4 million over the weekend.
Steen says Goodluck Hope should benefit from improved infrastructure and a growing number of cultural and entertainment communities sprouting within East London.
“There is strong growth [in London] in the right projects. Well informed investors like those in Hong Kong are becoming more selective, they’re confident in the market but they’re also looking for well designed projects with good development [in the surrounding neighbourhood],” says Steen.
These homes are a four minute subway journey from the Canary Wharf financial district and nestled within a neighbourhood of food and beverage outlets, recording and art studios, co-working space and the soon to be relocated London Film school. East London is also said to be the next big art and cultural hub in the city. Steen believes the project “checks all the boxes” as a highly liveable residential property that will yield steady return. “It’s a well-designed space that will have better rental yield and better quality tenants,” she said.
However, concerns are growing that London house prices could be set for a drop this year and next amid concerns over the Brexit fallout. A quarterly poll of 30 analysts by Reuters found that prices in the British capital are expected to drop 1.6 per cent this year and 0.1 per cent in 2019.
Mark Elliott, head of international residential at Savills observed this drop, but he believes it has bottomed out and the London market will pick up again in the coming months. “There was a temporary adjustment in the market due to land and construction prices. But we’ve seen some record breaking sales in recent weeks,” he said.
Developers were cautious about breaking ground on new projects following the Brexit vote, which resulted in a gap between supply and demand. This, Elliott said, was driving up interest among potential buyers. “Foreign investors are speculating on the low pound and we’re also seeing a big influx of local buyers,” he said.
Meanwhile, Steen does not agree that the UK exit from the European Union will have a major impact on London’s property market.
“All the things that make London what it is, the culture, the entertainment, the education, the diversity, and the creativity, these things don’t change [with Brexit].”
Mandy Wong, national director, head of international residential at Jones Lang LaSelle International Properties agrees that London, continues to be the destination of choice for Hongkongers looking to purchase property overseas.
“Properties in London and the UK in general are still very safe investments. The tax system is still easy [for foreign investors] compared to Canada and the US,” Wong said.
She added that Manchester was another attractive option for Hong Kong investors.
Located on the The River Thames at the historic Leamouth Peninsula, the East London project comprises a total of 804 studio to three-bedroom flats, with 153 units earmarked for affordable housing to be made available at a 30 per cent discount of private market price to local residents.
The project is set for completion early 2020, with the last of the two phases set to complete by late 2021.
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