Hong Kong’s property buyers stayed home over the weekend, handing Wheelock Properties the first sales slump in more than 12 months as a fresh outbreak of the coronavirus disease sent the market into an early recess three days before the Lunar New Year begins.
Wheelock failed to find any buyer for the 96 apartments on offer at its Koko Hills project in Kwun Tong as of 7:30pm, sales agents said. The flats, leftovers from July 2020, were priced at HK$21,491 (US$2,758) per square foot on average after discounts, 7.5 per cent more expensive than their launch price 18 months ago.
The flop, in contrast to Henderson Land Development’s sell-out weekend a week earlier, showed how Hong Kong’s property buyers are becoming picky amid a flood of new apartments expected in the market. A fresh wave of Covid-19 cases also gave buyers reason to stay away, as Hong Kong recorded the seventh consecutive day of triple-digit infections on Saturday.
“The time before the [Lunar] New Year is traditionally the quietest time of the year for the property market in Hong Kong,” said Hannah Jeong, head of valuation and advisory services at Colliers Hong Kong. “The fifth wave of the pandemic is also putting further pressure on the residential market.”
Koko Hills comprises three phases, the first phase featuring 413 apartments in three tower blocks, one of which stands at 21 storeys. Wheelock priced its July 2020 launch at a premium to the most recent project in the neighbourhood, and substantially more than second-hand home prices in the area.
When Koko Hills first went on sale, 1,400 buyers registered to bid for 160 flats, snapping up 53 per cent of them.
This time, Wheelock kept 81 of the 96 flats for open sale, pricing them between HK$19,674 and HK$25,634 per square foot for units starting from 366 square feet, going up to 670 square feet. Fifteen apartments measuring from 520 to 1,780 sq ft (165 square metres) were reserved for sales by tender, priced from HK$10.9 million to HK$49.3 million.
Still, there were no transactions, as “the project had been on the market for a while,” said Sammy Po Siu-ming, chief executive of Midland Realty’s residential department.
Hong Kong’s home prices advanced for the 13th consecutive year in 2021, as the city’s residential property market defied all projections of gloom to remain one of the most expensive. Still, rising interest rates foreshadowed by the US Federal Reserve will lead to higher cost of funds in Hong Kong, which runs its monetary policy in lockstep with the United States.
“The first quarter of the year is likely to be a quiet time for the property market due to the Omicron variant, which makes inspection arrangements difficult and brings uncertainties to the overall economy,” Jeong said. “We are expecting market recovery from the second quarter.”
Knight Frank’s Greater China research head Martin Wong echoed the expectation of a subdued first quarter, adding that the real estate industry is likely to take a breather as it adjusts to rising interest rates and the fifth wave of Covid-19.
“The market will undergo a transition period in the upcoming one to two months,” he said. “If the fifth outbreak of the pandemic in the city is brought under control soon, we are confident that the mass residential market can replicate the success last year and the overall price could go up by 3 per cent.”