The very first home sale in Hong Kong for the year 2018 is ready to sell out because buyers are getting in prior to the increase in mortgage rates.
Agents confirmed that a total of 140 units out of the available 160 units were already reserved as of 9 PM Saturday. They added that it is very likely that the remaining 20 units might also be taken.
This year saw Wheelock & Co., kick off the first sale of some residential property in Hong Kong in large scale. The company is bracing itself to have a successful campaign next week just like it had in the first one.
On Friday, the developer sold out the third batch of his Malibu apartment complex located in Tseung Kwan O at Lohas Park. They were a total of 160 units and were sold for HK$1.37 billion, an equivalent of US$174.7 billion. This means that the average price per square foot was HK$15,827 after discounts, a price that is 7% higher compared to the 2 batches that had been sold a week earlier.
On Saturday, the sales agent mentioned that another 160 units were put on offer. 140 of the 160 units received bookings as of 9PM, accounting for 87%. The agents were confident that the remaining units would be taken up.
The 1600 apartment units in the Malibu complex are expected to transform Lohas Park to become the largest residential enclave in Hong Kong. The projected is expected to be completed by the year 2025. It is estimated that it will accommodate 58,000 residents in 21,500 flats.
Currently, Wheelock has realized a revenue of HK$7.77 billion from the sale of just 910 units in a total of 3 batches.
Friday and Saturday saw quick sales as a total of 5000 buyers registered to bid for three hundred and twenty units during the 2 days. This means that each available flat had an average of 15 buyers.
The vice chairman of Asia-Pacific at Centaline known as Louis Chan Wing-kit, said that the sale was driven by long-term investors and a big demand from owner-occupiers. The agents of Asia-Pacific assisted ten clients in booking two units that were each valued at HK$20 million. Louis believes that the market still has a lot of liquidity.
The home prices in Hong Kong had been steadily rising for ten consecutive months but hit a record high in January. Investors and home buyers flooded the market prior to the interest rate hike that the government signaled.
Hong Kong will likely increase the interest rates after the meeting of the US Federal Reserve to be held on 21st March. This is because the US interest rates are likely to increase by 25 basis points. However, the mortgage rates in the city are unlikely to change for at least several more months. As the rates gap between Hong Kong and the US widens, the carry trade will weaken the local currency. This will prompt investors to turn to real estate to invest their wealth.
Real estate consultancy JLL forecasts that the price of residential property in 2018 will rise by another 10-20%.
This will help the bottom lines of property builders in the city like Sun Hung Kai, CK Assets and Wheelock.
According to the stock exchange filing on March 11th, the underlying profit of Wheelock in 2017 minus revaluation gains from investments increased to HK$12 billion, a 1.5% rise. On the other hand, the property sales revenue of the company experienced 18% increase to HK$12 billion.