Price cuts weigh heavy on the luxury market

Property | Staff reporter 22 Jul 2021

Flats at two luxury towers in North Point were sold at discounted prices despite a pick-up in the property market that is supported by health authorities bringing the pandemic situation in Hong Kong well under control.

Eleven out of the 15 secondary market deals at Victoria Harbour and Harbour Glory were sold with price cuts of up to 20 percent.

Prices at the two developments can be as high as HK$50,000 to HK$70,000 per square foot in the primary market. The soaring prices, coupled with diminishing mainland capital inflows, made the flats seem less attractive to potential buyers, insiders said.

Though the primary market is booming, values of some luxury homes have slid after residents moved in.

Victoria Harbour, the luxury development of Sun Hung Kai Properties (0016) that sits on the waterfront at North Point, has sold around 100 of the 355 units so far. The biggest deal was priced at more than HK$73,000 per sq ft, the highest for a flat on the east of Hong Kong Island.

The project has only seen three secondary transactions and all of them were offloaded at losses.

One of the deals involved a 1,129-sq-ft unit in tower one, which was sold off for HK$51.3 million, or HK$45,000 per sq ft, in May. The seller had it for HK$63.88 million in 2018 from the developer. That translated into a nearly 20 percent capital loss after holding on to the property for three years.

Land Registry data shows another flat on the upper floor of tower 5A sold for HK$14.9 million.

The seller purchased the unit for HK$14.87 million in 2018, but earned only a capital gain of HK$30,000 after holding it for one year. He suffered a HK$2.2 million loss after stamp duties and other costs.

For its part, Harbour Glory, developed by CK Asset (1113), attracted many savvy local and mainland buyers when it was launched in 2017 as it was often in the news at that time.

All 378 units were sold by last year, many of the deals involving bulk transactions. A unit with a rooftop was sold off for HK$55,000 per sq ft, a new high in the estate.

However, eight of 12 secondary deals at the project have seen losses since last year.

The latest was a 1,362-sq-ft unit in block seven, which was sold for HK$62 million, or HK$45,000 per sq ft, in early May. The seller, who paid HK$73.89 million in 2017 for it, will incur a capital loss of HK$11.89 million, a 16 percent hit.

Thirty flats in Harbour Glory are in the secondary market, priced upward from HK$14 million. Some are being offered at discounts, which a real-estate agency in North Point says is unusual.

A middle-floor flat in block one is up for sale at HK$52 million, HK$2.7 million less than what the owner paid for it two years ago.

Another unit on the lower floor of block seven is being quoted at HK$41 million, a discount of HK$1.89 million to the previous valuation - HK$42.89 million.

Thomas Lam Ho-man, executive director and head of valuation and advisory at Knight Frank, said market acceptance of Victoria Harbour and Harbour Glory asking prices is weak due to the lack of mainland buyers with the border lockdown.

As such, some owners are slashing prices to sell their flats and improve their liquidity, Lam said.

Vincent Cheung Kiu-cho, managing director of Vincorn Consulting and Appraisal, said the projects are luxury residences that are outside the traditional luxury district, and as such, the per-sq-ft price of HK$50,000 to HK$70,000 is higher than what potential buyers on the market can tolerate.



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