Become the king of Hong Kong's new ticket market!, Journalist's investigation: Over 30000 people rushed to buy, crazy! Li Ka shing's Hong Kong 70% Off Home Sales Market | II | Reporter
The subscription response of Oil Pond Pro Sea II, a subsidiary of Changshi Group, exceeded market expectations and was officially cut off at 8:00 pm on August 10th. Eventually, it received over 38000 tickets, oversubscribing nearly 60 times, making it the highest new market ticket king in Hong Kong's history.
The reason why this product has attracted market attention is that its gimmick is 30% lower than the surrounding market price, which is very attractive. As a benchmark in the real estate industry, Li Ka shing's astonishing move of selling properties at a low price has released what signals? Why does Changjiang Industrial Group want to sell buildings at a discount? On August 11th, a reporter from Securities Times visited the location of the Yau Tong Pro Sea II project in Hong Kong to explore the situation.
Hong Kong's new market ticket king oversubscribed nearly 60 times
The subscription response to the Yau Tang Qinhai Phase II project of Li Ka shing's subsidiary Changshi Group can be described as "explosive". Kelvin, the sales manager of Zhongyuan Real Estate, told Securities Times reporters that there were still a large number of potential buyers submitting registration documents for the final sprint before the deadline of 8 pm on August 10th. Therefore, the developer processes registration and ticket counting until early morning to confirm the number of tickets received.
According to reporters, after being counted by the developers, they finally received over 38000 new tickets, which is nearly 60 times more than the 626 sets sold on August 12th, and replaced the Park Ao Estate III as the most popular new ticket king in Hong Kong's history. From the distribution of ticket sources, the Yau Tong area accounts for 15%, Tseung Kwan O accounts for 25%, Kai Tak accounts for 20%, and Kwun Tong accounts for 10%, with the rest coming from Tsuen Wan and the northwest New Territories.
Kelvin explained, "On August 12th, the first round of sales of the Pro Sea 駅 II included all 626 units of standard tiered households, with an average price of HKD 14868 per foot. This price is indeed more favorable than the surrounding areas, not just a few low-priced houses as a gimmick, but an overall average price that is significantly discounted compared to the surrounding areas."
The adjacent Xitai property currently has an average price of HKD 16934 per square foot, an average price of HKD 20245 per square foot on the Blue East Coast, an average price of HKD 18321 per square foot on Langyu, and an average price of HKD 16516 per square foot on Ocean One.
However, as the outside world has said, there are indeed several low-priced houses in this project that have caught the eye. The minimum unit area K unit sold is only 210 feet, and the lowest discounted price is HKD 2.9 million, which is HKD 13800 per square foot. If calculated based on the minimum down payment of 10% for the first home in Hong Kong, only HKD 290000 is needed to board the car. For single people, this price is indeed attractive.
According to the residential property area of Phase II of Zhongyuan Real Estate, the minimum area is 19.538 square meters, the maximum is about 67 square meters, and most properties have an area of around 20 square meters.
There are two phases of Qinhai Mansion, among which the first batch of 132 units in Qinhai Mansion Phase II includes open plan and one to three bedroom units. The discount rate is around 18% to 19%, and the discounted price is about HKD 2.9 million to HKD 11.143 million. The expected delivery date is October 15, 2025, and the property development period is about 27 months.
Practical Exploration of the Sea II
On August 11th, the reporter went to the Qinhai II project located in Youtang. It takes about 15 minutes to walk from Exit A of the Youtang subway to reach the destination. Google Maps shows that it is about 1 kilometer away from the subway station. During the journey, the reporter found that the surrounding areas were mostly car repair shops and old factories, and the supporting facilities and environment were not very good.
Subsequently, the reporter arrived at the location of the Qinhai Lake II project, which is currently under construction. Next to it is the Kwun Tong Fish Wholesale Market and Cement Factory. It is worth mentioning that the project does indeed face the sea, but a nearby agent told reporters that in reality, only high-rise buildings can enjoy the sea view, and there is basically no scenery on lower floors.
According to on-site staff, the nearby fish wholesale market will be purchased and rebuilt as a residential project, but the exact time of reconstruction is not yet known. "There is a reason for low prices, and the environment is not very good. If you buy a low floor, you may smell a fishy smell when you open the window. In addition, there is a cement factory next to the first phase, and you have to endure the noise and dust from the surrounding cement factories. These are all factories around, and the noise pollution is relatively high."
It seems that Hong Kong people have engraved property into their DNA, even though the surrounding environment can be described as "dirty, messy, and poor", it still cannot resist the enthusiasm of Hong Kong people to buy houses. Kelvin told reporters that the property has attracted a large number of customers outside of luxury homes, breaking the psychological expectations of homebuyers. "Even many mainland Chinese people have come to view the property and submit application materials, but there is a 30% stamp duty for mainland Chinese people to buy a house in Hong Kong. If the total price of this property is 3 million Hong Kong dollars, an additional 900000 Hong Kong dollars will need to be paid."
In order to promote sales, a Hong Kong agency has put forward the slogan of "You can afford to buy a million three bedroom apartment with a monthly salary of 3000 yuan" on the pro Hai website. It is understood that Changjiang Industrial has also launched a "90% mortgage" to attract customers who are interested in purchasing the second phase of Qinhai Mansion. Firstly, customers do not need to pass stress tests or provide any proof of income. They only need to have an ID card. Secondly, customers can make a 10% down payment, and the developer can provide the remaining 90% loan unconditionally. Thirdly, only interest needs to be paid in the first three years, with a fixed interest rate of 1% in the first year, 2% in the second year, and 3% in the third year.
The strong promotion of discounted properties has also had a significant impact on the Hong Kong real estate market. Due to the significantly lower selling prices of these properties than the market price, some industry insiders even say that this price is like a "depth bomb", piercing the psychological defenses of second-hand property owners, causing many owners to reassess their property value and market prospects.
In fact, recently Cheung Kong Holdings has been throwing "depth bombs" into the Hong Kong real estate market, such as the Tuen Mun Flyer Phase II, which opened in March this year. The first batch of units launched at that time were priced from HKD 11042 to HKD 13972 per square foot, with the lowest price setting a new low for the surrounding area in three years and being described as "bleeding prices".
This has also sparked various speculations in the market about the reasons behind Li Ka shing's sale of properties. As a business legend, Li Ka shing has always been known for his cautious investment strategy. Some argue that this sell-off may indicate that he has predicted potential risks in the future real estate market, which is why he needs to quickly recover funds.
"For the diversified development, strong strength, diverse funding sources, and strong anti cyclical Changhe series, it is obvious that discounted home sales are not due to cash flow or performance pressure. It is likely to be a measure taken to accelerate depreciation and repayment under the grasp of the next economic trend and opportunity judgment." said Bai Wenxi, Chief Economist of IPG China.
Hong Kong financial commentator Yan Baogang stated that the inventory of first-hand buildings in Hong Kong this year is close to 20000 to 30000, and if developers are not willing to reduce prices, it is difficult to achieve the goal of destocking. Changshi's new sales strategy follows the group's consistent and stable investment strategy, but it will have a negative impact on the development of the Hong Kong real estate market.
Yan Baogang said, "Changshi is currently reducing prices to create a gap, which poses certain pressure on other developers. They also need to lower prices according to market prices to reduce their debt levels. The second-hand market is influenced by the primary market, and if developers significantly lower prices, the second-hand market will inevitably follow. This is because Hong Kong's economy is mainly supported by consumption this year, and if the negative effects of the real estate market affect the wealth effect, it will also have a certain negative impact on the overall economy of Hong Kong."
The sluggish real estate market is stimulated by the Hong Kong SAR government's "spicy moves"
The Rating and Valuation Department of the Hong Kong Special Administrative Region Government has given the following evaluation of the Hong Kong real estate market in 2022: the residential property market has lost momentum in 2022. However, as we enter 2023, the Hong Kong real estate market has not significantly improved and still shows a weak trend.
A set of data released by the Hong Kong Monetary Authority in July showed that as of the end of June this year, the overall residential property prices in Hong Kong have cumulatively fallen by 13% compared to the high point in 2021, and the situation in the non residential property market is also similar. According to the latest statistics released by the Hong Kong Valuation Department, the prices of office buildings, layered factory buildings, and retail properties have decreased by 20%, 8%, and 17% respectively compared to their peak periods from 2018 to 2019.
Therefore, on July 7th, the Hong Kong Monetary Authority revised the countercyclical macro prudential regulatory measures for some property mortgage loans, including:
Firstly, for eligible properties priced at HKD 10 million or less, the maximum mortgage insurance percentage should be maintained at 90%; Qualified properties priced between HKD 10 million and HKD 15 million, with a maximum mortgage insurance coverage of 80% or a maximum mortgage loan coverage of HKD 9 million, whichever is higher; For eligible properties priced between HKD 15 million and HKD 30 million, the maximum mortgage insurance percentage is 70% or calculated based on the maximum mortgage loan limit of HKD 12 million, whichever is higher.
Secondly, the maximum mortgage interest rate for non residential properties has been increased from 50% to 60%.
Thirdly, the upper limit of the mortgage amount for property mortgage loans approved based on "asset level" has been increased from 40% to 50%. This revision applies to all residential and non residential properties.
Fourthly, cancel the current requirement for mortgage loan applicants whose main income comes from outside Hong Kong, and lower the upper limit of the mortgage percentage and the "contribution to income ratio" by 10 percentage points; At the same time, the requirement for mortgage applicants to lower the upper limit of the applicable "contribution to income ratio" by 5 percentage points when the overall mortgage amount exceeds the allowable level of the Monetary Authority by 20 percentage points is cancelled.
This is the first time since the Hong Kong Monetary Authority implemented countercyclical macro prudential regulatory measures in 2009 that it has relaxed measures targeting residential properties. After this revision, citizens who own properties will be able to apply for a higher percentage of mortgage loans.
Wang Meifeng, Managing Director of Zhongyuan Mortgage, stated that this "spicy move" allows homebuyers with a property price of less than HKD 10 million to choose to use up to 90% of the loan to purchase their property. Taking the property price of HKD 10 million as an example, the previous mortgage down payment required 30%, which was HKD 3 million. Now, only HKD 1 million is needed to get on the car, greatly reducing the threshold for homebuyers to get on the car. At present, with the implementation of the new policy and the clarification of the policy, buyers are exempt from waiting for the policy to relax and suspending their entry into the market. We believe that prospective buyers will accelerate their entry into the market. Helps promote the healthy development of the real estate market.
