This year is different. Developers are stepping into the role of leaders: Chinachem Group, Henderson Land and Far East Consortium International Ltd. are among many who are offering financing of up to 90% through associated companies. They are refusing to drop prices which would send the red flag signal of an economic downturn for Qingjian Realty EC.
Developers for Inz Residence EC are very keen to sell, but don’t want to cut prices, so they have progressively increased the buyer incentives said Yu Kam-Hung, senior managing director for investment properties at CRBE Group Inc. in Hong Kong.
Developer Incentives Qingjian EC
“They feel there is uncertainty over the economy and government policies to increase supply and want to move properties before the overall market turns down.”
In the instance of Kowloon Development, the rebates on the Upper East development decreased the price the purchaser paid for the two flats from more than HK$8 million to HK$6.9 million (S$1.3 million).
In the upscale Cadogan across Victoria Harbor in the Kennedy Town neighborhood on Hong Kong Island, similar enticements are being offered by Kowloon Development for Choa Chu Kang Ave 5 EC.
Qingjian Realty Choa Chu Kang EC
In October, a 732 sq. ft. apartment on the 31st floor listed at HK$21 million only cost the buyer HK$18.5 million, with 1st and 2nd mortgages covering up to 90%.
Buyers such as Inz Residences EC with luxury purchasing capabilities are unlikely to need this type of developer assistance. The benefit is greater, for example, for first-time Choa Chu Kang EC home buyers constrained by loan-to-value ratios of 60% on bank lending imposed by the Hong Kong Monetary Authority, says Keith Chang, managing director of residential services at Savills Plc. The previous ceiling was 70% on properties selling for less than HK$7 million. It was lowered in March to lessen property prices in Choa Chu Kang Ave 5 EC.
Choa Chu Kang Ave 5
Analysis led by Paul Louie at Barclys Plc., which used recent sales data, said in December that 18% of primary homebuyers on average avoided developer financing packages, stating that the “take-up of these plans is not as common as one would think.”
An exception, which should be excluded from the average, was Henderson Land’s Eltanin Square Mile development. About 42%, or about 118 out of 279 units from the development sold, were financed with developer mortgages, according to Barclays.