Business
Sun Hung Kai Ends Price War in Yuen Long, Betting on Rate Cuts to Attract Homebuyers: A Shift in Hong Kong’s Property Market Strategy
Sun Hung Kai puts an end to the price competition in the Yuen Long project, banking on interest rate reductions to attract property buyers. The largest developer in Hong Kong appears to be suggesting that lower loan costs are sufficient to draw in individuals looking to purchase homes.
Sun Hung Kai Properties (SHKP) is listing some of its newly constructed units in Yuen Long at the same price as the previous quarter's launch, indicating that the city's property developers anticipate lower lending rates will significantly attract potential buyers back into the market.
The largest property developer in Hong Kong is planning to sell 94 apartments in Tower Six of the Yoho Hub II project next week. The average price for these apartments is set at HK$14,338 per square foot, as revealed in the price list published on Tuesday. Interestingly, this price remains the same as when all 423 apartments in Tower Eight were sold in May.
The company could potentially be leading the way for other businesses in the sector to protect their profit margins, following multiple instances of price reductions during the Covid-19 crisis to deplete their stock. Traders in the rate market predict that the Federal Reserve is highly likely to reduce its target rate by 0.25% this week. The Hong Kong Monetary Authority typically mirrors the actions of the Fed due to its tied exchange rate system.
"Price reductions will be reliant on the supply in specific regions, and areas with surplus will persistently experience decreases," stated Martin Wong, the chief director and research leader at Knight Frank Greater China. He added that the overall reduction in prices is expected to slow down as we anticipate more rate reductions leading up to 2025.
Sun Hung Kai recently cut its selling price by up to 28 per cent at the Yuen Long property in May, in an effort to outdo competitors and attract customers. A gloomy economy and the highest borrowing costs in 17 years have led to a decrease in demand, as potential buyers wait for more affordable prices.
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