Cash-strapped Chinese are scrambling to sell their luxury homes in Hong Kong and some are knocking up to a fifth off the price for a quick sale as a liquidity crunch looms on the mainland.
Wealthy Chinese were blamed for pushing up property prices in Hong Kong, where they accounted for 43 per cent of new luxury home purchases in the third quarter of 2012, before a tax hike on foreign buyers was announced.
The rush to sell now coincides with a forecast 10 per cent drop in property prices this year, as the tax increase and rising borrowing costs cool housing demand. Concurrently, credit conditions in China have tightened and the looming bankruptcy of a Chinese property developer owing 3.5 billion yuan (S$720 million) have heightened concerns that financial risk was spreading.
“Some of the mainland sellers have liquidity issues … Their companies in China have some difficulties, so they sold the houses to get cash,” said Mr Norton Ng, Account Manager at a Centaline Property office close to the China border, where luxury homes costing up to HK$30 million (S$4.89 million) have been popular with mainland buyers.
Property agents said mainland Chinese own about a third of the existing homes that are now for sale in Hong Kong — up 20 per cent from a year ago. Many are offering discounts of 5 to 10 per cent from the market average — and, in some cases, as much as 20 per cent, property agents and analysts said.
In a Hong Kong housing development called Valais, about 10 minutes’ drive from the Chinese border, real estate agents said between a quarter and half of the 330 houses are now on sale. At the development’s frenzied debut in 2010, a third of the HK$30 million to HK$66 million units were sold on the first day, with nearly half going to mainland Chinese.
Built by the city’s largest developer, Sun Hung Kai Properties, Valais is one of many estates in Hong Kong where agents are seeing an increasing number of Chinese eager to sell.
“Many mainland buyers bought lots of properties in Hong Kong when the market was red-hot three years ago, but now they want to cash in as liquidity is quite tight in the mainland,” said Mr Joseph Tsang, Managing Director at Jones Lang LaSalle.
A spokesman for Sun Hung Kai said the current occupancy rate at Valais was 75 per cent, and most of the sellers were looking for a good selling price and not eager to sell at deep discounts. In West Kowloon district, where mainland Chinese bought up close to a quarter of the apartments in many newly-developed estates, some are offering steep discounts on the higher-end apartments they bought just a few years ago.
This month, a Chinese landlord sold a 1,300 sq ft unit at the Imperial Cullinan — a high-end estate developed by Sun Hung Kai in 2012 — for HK$19.3 million, 17 per cent less than the original price. The landlord told agents to sell the flat as soon as possible, said Mr Richard Chan, Branch Manager at Centaline Property in West Kowloon. “In the past two weeks, those who were willing to cut prices were mainland Chinese. It is going to have some impact on the local property market — that’s for sure,” he said.
Source : Today – 21 Mar 2014