Li Ka-shing's new property development has witnessed a selling frenzy.
Recently, news of Li Ka-shing's properties being sold at a 30% discount has shaken the Hong Kong real estate scene. The "jaw-dropping prices" have resulted in a mad rush for the new property development under Cheung Kong Holdings, "Qin Hai Station II". In just the first two days of subscriptions, over 5,000 applications were received, marking an oversubscription of 18.6 times. Cheung Kong Holdings announced on August 6 that an additional 122 apartments would be made available at the original price. A prior report from a brokerage firm in China had pointed out that the pricing of "Qin Hai Station II" was like a "depth charge" affecting the psyche of secondary home sellers.
Notably, the supply of new first-hand residential flats in Hong Kong is on the rise, hinting at a possible escalation in the "price war". The Hong Kong Lands Department approved the pre-sale of a total of 4,602 units in July, a more than fourfold increase month-on-month and a peak for the past year. Currently, there are about 16,000 approved unsold properties in Hong Kong, a recent record. Many developers are resorting to a "volume-first, price-later" strategy, opting for conservative pricing and even luring customers with prices lower than those of secondary properties.
Selling Like Hotcakes
Over the past weekend, Cheung Kong Holdings' new property development located on Dongyuan Street, Yau Tong, "Qin Hai Station II", was officially open for public viewing and subscription.
The response could be described as "booming". Early in the day, people lined up outside the sales office at Tsim Sha Tsui's Harbour View, and the crowd awaiting the opening was impressive. Customers flooded the mall to view the demo units.
The Hong Kong Economic Daily cited insiders reporting that due to the initial pricing being the lowest in years, the market response was enthusiastic. The "Qin Hai Station II" project received over 5,000 applications in its first two days, with an oversubscription rate of 18.6 times.
In light of the overwhelming response, Guo Ziwei, Chief Manager of the sales division of Cheung Kong Holdings, said that the company was actively considering releasing more units in response to the market demand. Zhao Guoxiong, Executive Director of Cheung Kong Holdings, expressed satisfaction with the turnout for the property viewing and said that the attractive pricing, comparable to subsidized housing, could encourage potential buyers.
Pricing details released for "Qin Hai Station II" show that the most affordable studio unit, sized at approximately 210 sq. ft., after an 18% discount, is priced at HKD 2.9 million. Notably, this price is about 30% cheaper than surrounding secondary properties, returning to levels seen seven years ago.
Industry insiders noted that the pricing for "Qin Hai Station II" might disrupt the secondary market. After "Qin Hai Station II" set its prices, some property owners in the nearby General's Bay area immediately slashed their property prices by 5%.
It's worth noting that while Yau Tong is located in Kowloon, it's just one subway stop away from Hong Kong Island. Many locals believe it's like "buying a sea-view property near Hong Kong Island at Tuen Mun prices". This has attracted attention not just locally but also from mainland China.
However, it should be highlighted that "Qin Hai Station II" is expected to be ready for occupants only by October 2025, which is 27 months from now.
Analysts suggest that the brisk sales of the new property could stimulate sales of other new developments in Hong Kong. A new phase of property under the Henderson Land Group will be launched on August 8, with an initial batch of 278 units.
The "Price War" May Intensify
The supply of first-hand residential properties in Hong Kong is consistently increasing, hinting at a possible intensification in the price wars.
Currently, there are 32 approved but unsold property projects in Hong Kong. The second half of the year is expected to see more new property launches, setting the stage for a sales peak.
According to data from Centaline Property, nearly 16,000 units have been approved but not yet on sale. Assuming half of these, or 8,000 units, will be launched this year, an average monthly transaction volume of 1,600 units is needed to absorb this supply.
With such a supply-demand gap, many developers are adopting the "volume-first, price-later" strategy, pricing conservatively and even offering prices below secondary market levels, indicating potential risks of a downward trend in Hong Kong property prices.
On the future outlook for Hong Kong's property market, Victor Li, Chairman of Cheung Kong Holdings, mentioned that the current possibility of interest rates dropping is higher compared to three years ago. He believes the downward potential for land prices, which have already fallen to near-government cost levels, is limited compared to previous years.
