Buyers snap up 92 flats at HK$40m each

Sun Hung Kai may put up another 50 apartments for sale this week

Sun Hung Kai Properties Ltd, the world’s biggest developer by market value, will put another 50 luxury apartments up for sale in Hong Kong after buyers snapped up all 92 flats in a first batch put up for sale over the weekend.

The company sold the apartments at its Larvotto project at an average of about HK$40 million (S$7.1 million) per unit, bringing in about HK$4 billion in revenue, Sun Hung Kai said in a press release.

The new batch may go on sale in the middle of this week, it said, adding that their average sale prices may be 2 per cent higher.

‘The price is reasonable for properties of this quality,’ Eva Yeung, an agent at Centaline Property Agency Ltd who bought a HK$47 million unit on behalf of a Hong Kong-based client, said outside the project’s showroom at the International Financial Centre building in the Central business district on Saturday.

Ms Yeung said the luxury property market in Hong Kong will be supported by the lack of supply and increased demand from Chinese buyers. That may counter Hong Kong government efforts to curb a 38 per cent surge in home prices since the beginning of 2009 amid concerns that housing is becoming unaffordable.

About 20 per cent of the buyers over the weekend were from mainland China, Sun Hung Kai said.

‘Demand has exceeded supply,’ Victor Lui, an executive director at Sun Hung Kai’s agency arm, said in the press release. ‘All of the units were sold within the first few hours after sales began.’

Sun Hung Kai fell 0.3 per cent to HK$111.50 at the close of trading in Hong Kong yesterday. The Hang Seng Property Index that tracks the performance of seven Hong Kong developers dropped 0.4 per cent.

Sun Hung Kai and partners Kerry Properties Ltd and Paliburg Holdings Ltd last week said they were putting the apartments in the Ap Lei Chau district up for sale for between HK$15,811 per square foot and HK$22,500 psf, a record for the district.

Second-hand units in Bel-Air, a luxury project in the nearby Pokfulam district, are selling for ‘similar prices’ to Larvotto, according to Buggle Lau, chief analyst at property agency Midland Holdings Ltd. New developments in the area will probably sell at a minimum of HK$15,000 psf, he said.

Luxury residential prices in the Island South district, which includes Repulse Bay and Stanley areas, grew 2.5 per cent in the second quarter, after rising by nearly 35 per cent in the previous nine months, according to property consultant Knight Frank LLP.

Luxury homes are those at least 1,000 square feet (93 sq meters) or costing at least HK$10 million.

Apartments at Larvotto, which has 715 units, will be around 1,500 to 2,500 sq ft. Larvotto is the name of the main public beach in Monaco.

Hong Kong developers sell units in developments in batches instead of offering them all at once to gauge demand and take advantage of rising prices.

The authorities have introduced rules on new home sales and are investigating cancelled sales at a Henderson Land Development Co luxury apartment project.

Henderson last month cancelled 20 transactions at its project in the Mid-Levels district, including the one the company claimed would fetch a record HK$88,000 psf, prompting lawmakers to call for an investigation.

The Legislative Council on July 12 held its first special meeting to discuss the collapsed sales, which were worth HK$2.67 billion, according to Henderson.

Since last year Hong Kong has raised the requirement for downpayments on luxury homes and cracked down on misleading marketing by developers, including the use of show flats, after officials expressed concern that prices were rising too fast.

Source : Bloomberg – 20 Jul 2010

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