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News Release

HONG KONG

Developers adopt cautious approach in launching new projects

Home prices will begin to drop in 2018 after land prices fall early this year


HONG KONG, 2 May 2016 – Developers have adopted a cautious approach in launching new residential projects owing to a flood of ready-for-sale projects in the market in March, according to JLL's latest Monthly Hong Kong Residential Sales Market released today. 

In Homantin, the launch of Zumurud was cancelled last month amid a wave of new launches in the district, including Ultima (Phase 2), One Homantin and Mantin Heights. In Mid-Levels West, Swire Properties undercut the market by setting the average price at Alassio at a considerable discount to comparable new developments in the vicinity; HKD27,000 per sq ft in terms of saleable area. The project received overwhelming market response with its first two batches of 40 units each more or less selling out within two hours of being launched, and its third batch selling 39 units.

According to data from the Land Registry, home sales rebounded by 31.1% m-o-m to 2,369 in February, with the primary sales market accounting for about 27% of all transactions. Still, figures from JLL showed the capital values of mass residential dropping for the sixth consecutive month in March, down 1.4% m-o-m.

Henry Mok, Regional Director of Capital Markets at JLL, said: "The battle amongst developers in Homantin and Mid-Levels West is expected to heat-up over the coming months as more units are launched onto the market. With volumes at near-record low levels, more developers will likely need to offer steep discounts to attract the attention of buyers."

Regarding the government announcement that there will be a total of 92,000 new flats available on the market in the next 3 to 4 years, he said: "It is true that the new housing supply is increasing. Land prices, however, have stayed at high levels over the past few years and began to drop early this year. For the new projects with higher land acquisition costs, the discounts offered by the developers will be limited. The sites sold at lower prices early this year will be made available for pre-sale as early as 2018, and we expect to see a significant cut in asking prices for the properties."​

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