Hong Kong apartments experienced further price drops when the new residential project at Tseung Kwan O had a disappointing opening on Monday. The project’s failure to impress buyers indicates the continuing negative sentiments in the most unaffordable real estate market of the world. The market’s downfall is mainly attributed to the people’s ongoing protests against the government.
According to the SCMP Wheelock Properties residential project consisting of 101 units of one and two bedroom configurations could find buyers only for 20 Hong Kong apartments. The Grand Marini project located in Lohas Park was opened for sale today with high hopes. The CEO of the residential division of Midland Realtys, Sammy Po mentioned that the Hong Kong apartments sold between HK$7-8 million, which was much below par. Real estate buyers have been playing the wait and watch game fearful of the declining rates due to public unrest.
Hong Kong has been hit by an economic crisis due to the public protests coupled with the extended US-China trade war. The demonstrations had initially started as a result of the introduction of the extradition bill. Even though the bill got shelved, protests have continued as the people are now asking for overall democratic reforms.
This was the first real estate sale event after the introduction of the new legislation that banned protestors from wearing masks. The Hang Seng Index dived down to its lowest value over the month after the law was enforced on Friday. This law enraged the protestors further and the violence rose exponentially over the weekend.
Despite the large scale protests leading to closure of most of the MTR stations, the builder went ahead with the sales event of Hong Kong apartments on Chung Yeung Festival as per plan.
Vincorn Consulting and Appraisal MD, Vincent Cheung said that the participation was affected by the inability of buyers and agents to move to the sale.
Vincent further added that there’s no doubt that the protests have affected the market. But the actual impact can be gauged once the public transport services are normalized.
He noted that the investors’ real sentiments can be known once the city is safe. Only time will tell whether the new anti-mask law will reduce the protests or not. Buyers will wait till the time the government gets the situation under control.
The Citi Hong Kong survey carried out on 500 people in end September revealed that the number of people who believed that real estate prices will decline further in next one year has doubled to 56%.
As the public demonstrations continue into the fifth month, banks have reduced property valuations. The prices of homes in the secondary market have reduced by over 20% due to the fear in buyers.
The effect of the protests can be understood by comparing the sale of Wheelocks Montara project, which was offered for sale in the month of May. The project, which was also located in Lohas Park had 500 Hong Kong apartments and received over 18,000 applications was sold out for HK$4 billion. It had record breaking turnover in a single day.