How Hong Kong's property sector is suffering from holiday lull

Zero launches recorded last weekend.

According to Barclays Research, in the physical market, with the Lunar New Year less than one week away, the seasonal slowdown of transaction activity is finally upon us. In the primary market, with no new launches this past weekend, developers only recorded 13 transactions, according to the Hong Kong Economic Journal.

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Notable sales included 3 units at Avenue I in Wan Chai, 3 units at The Reach in Yuen Long and 2 units at Double Cove Starview in Ma On Shan.

Looking more broadly at the entire week, the momentum of recent launches was not as strong as in previous weeks. Sino Land/Hopewell/URA’s The Avenue I in Wan Chai drew only a lukewarm response despite its lower pricing than The Avenue II.

Compared with the 20x oversubscription for The Avenue II (4,500 indicative expressions of interest received for the first 220 units) back in November 2013, the first 50 units at The Avenue I (28% of a total 179 units) only yielded 110 indicative expressions of buying interest, indicating 2.2x oversubscription. Sino/Hopewell/URA managed to clear only 16 units on the first day of sales.

The second price list comprised of 28 units was released with an average price of HK$22,749psf (on SFA). With up to a 17.5% discount on the headline price, the net price could be as low as HK$18,768psf. Although this is 2.3% higher than the first batch of 50 units (price at HK$18,347psf), compared to the HK$21,017psf that the Avenue II fetched back in early January, this was 11% lower.

Similarly, the fourth batch of Henderson Land and NWD’s Double Cover Starview also experienced much lighter turnout. Instead of selling out like the previous batches, buyers only took up 200 out of the 272 available for sale units last Thursday, 23 January 2014.

Looking ahead, SHKP is preparing the re-launch of Riva in Yuen Long. The low-density project consists of 48 riverfront houses and 25 blocks offering 780 units. According to the transactions record from the ERPC, the developer only sold two houses back in March 2013 at HK$19,352psf.

The remaining 778 units could be offered for sale. SHKP plans to release 200 units after the Lunar New Year. In addition, Cheung Kong’s Mont Vest (1,071 units) in Tai Po is also likely to be ready for sale after the Lunar New Year, according to the HKET.