Nan Fung rents to avoid tax pains

Business | Samantha Wong and Annie Qiu 2 Aug 2018

Executives and directors of local developer Nan Fung Group recently rented out units at its Glendale Quarters residential development at 8 Deep Water Bay Road following the government's recent announcement that a vacancy tax would be slapped on empty new homes.

Land Registry records showed that the company rented out two houses and two duplex apartments in the development at rates between HK$420,000 and HK$920,000 each month.

A 12,566-square-foot house was rented out for about HK$73 per sq ft or HK$920,000 a month.

Another house, with a floor area of 7,710 sq ft, was leased for HK$71 per sq ft or HK$550,000.

A 6,529-sq-ft duplex home was rented out for HK$450,000 monthly, or HK$69 per sq ft. Another duplex, with a floor area of 5,785 sq ft, was rented out for HK$420,000 a month, or HK$73 per sq ft.

Property consultants said more developers are likely to offer for rent completed but unsold flats to avoid paying vacancy tax, especially those in non-core luxury residential areas.

Jones Lang LaSalle has predicted that about 1,500 luxury flats, with sizes from 1,722 sq ft, would become available over the next 30 months.

"However, this trend is likely to be more evident at the top end of the market since luxury properties typically take a longer period of time to sell," said Henry Mok, regional director of capital markets at JLL.

Apart from imposing a vacancy tax on completed but unsold flats, the government also now requires developers to launch for sale no less than 20 percent of all units in a project after the pre-sale consent is granted.

Meanwhile, Nan Fung recently received the pre-sale consent for the sixth phase of its Lohas Park project in Tseung Kwan O. The development will provide 2,392 flats.

Under the consent scheme, it has to offer for sale at least 478 flats in the first batch of its pre-sale. Construction of the project is expected to be completed in September 2020.

In other developments, Sun Hung Kai Properties (0016) yesterday received over 5,000 purchase applications for the first batch of 108 flats that it has offered for sale at its Park Yoho Milano project in Yuen Long.

Sun Hung Kai Real Estate Agency general manager Andy Chan said 20 to 30 percent of buyers may acquire more than one flat.

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