KOWLOON Development Co.’s Upper East project in Hong Kong’s Hung Hom area is offering a host of rebates and nonmarket discounts that can lower the Qingjian Realty EC charge to a purchaser by as much as 14%, and it will even add in a second mortgage.
The bait is paying off. Since its launch on Sept 5th, they have sold 940 out of 1,008 units. A particular buyer even snatched up apartments on the 6th and 8th floors, according to data from the company’s website.
Rebates for Brickland Choa Chu Kang EC
Kowloon Development is not unique in this. Cheung Kong Property Holdings Ltd. and Henderson Land Development Co. are only a couple of the Hong Kong developers giving enticements that include stamp-tax rebates, and 1st and 2nd mortgages to increase transactions.
This tactic allows them to avoid the price cuts that may cause a sharp reversal of gains for Inz Residence Choa Chu Kang that named the city the least affordable major housing market in the world.
“After 12 years of a bull market, Hong Kong property is at an inflection point,” said Spencer Leung, a Hong Kong strategist at UBS Group AG. “Property developers are trying hard not to paint a picture that things are going down.”
Qingjian Brickland Road EC
The strategy is not foolproof. Bocom International Holdings Co projects that house prices will drop as much as 20% in the next three to six months, while property adviser Colliers International Group Inc. projects a 15% decline next year.
The 10 largest private housing Choa Chu Kang Ave 5 EC estates saw volumes plunge to a nine year low this November, according to the Hong Kong Economic Journal on Dec. 1st while citing Centaline Property Agency Ltd.
Developers are working to increase expectations of a growth in housing supply for next year. They fear that the Qingjian Realty EC secondary market slowdown will also occur in new home sales.
Choa Chu Kang Avenue 5 EC by Qingjian
Mainland buyers, who’ve been central in increasing demand, have also scaled back. Their amount of property transactions in Hong Kong dropped from 12% to 6% in the first six months of this year, falling from their Qingjian Choa Chu Kang EC peak in 2011, according to data from Jones Lang LaSalle Inc.
The most recent surge of real estate incentives in Hong Kong was in 2003, after a six year plunge in home prices, according to Nicole Wong, Hong Kong based head of property research at CLSA Ltd. This decline in property prices forced developers to sell Choa Chu Kang EC by Qingjian Realty homes at a loss.