Hong Kong Developers Ignite Price War, Slashing New-Home Prices by Up to 38.5% in Anticipation of US Rate Cut

Real estate developers in Hong Kong initiate a competitive pricing battle to stimulate the market before the anticipated reduction in the Federal rate. In anticipation of an upcoming US rate cut, real estate firms are drastically reducing the prices of new homes by as much as 38.5 percent.

The residential venture, KT Marina, a collaboration between K Wah International, Wheelock Properties, and China Overseas in Kai Tak, initiated a fierce competition in pricing on Monday. They dramatically reduced the costs of 50 apartments in its Phase I by a staggering 38.5 per cent, which is a significant increase from the previous discounts of 22 per cent.

The mean cost for each square foot of these 50 properties, after markdowns, stood at HK$17,384 (US$2,229). This represented a 12% decrease compared to the initial price of the project's 208 apartments listed in October of the previous year.

The costs were comparable to the initial offering made in July by the adjacent project, Pavilia Forest I, a joint venture of New World Development and Far East Consortium. Those were the most affordable prices in the Kai Tak region in close to eight years, equating to HK$16,008 per square foot.

KT Marina is slashing prices, anticipating Hong Kong builders to introduce a minimum of six new developments comprising of 2,800 apartments in September, banking on an invigorated local real estate market. Last month, international markets took a positive turn when Jerome Powell, Chair of the Federal Reserve, indicated that US policymakers were prepared to cut rates. From March 2022 until July of the following year, the Fed increased its benchmark rate 11 times and has maintained it consistently in the nine meetings since. The subsequent rate determination meeting is scheduled for September 17-18.