New Hong Kong Real Estate Projects Postponed by Third COVID-19 Wave
Residential sales will continue to drop significantly until the outbreak is contained
According to global property consultant JLL's latest Hong Kong Residential Market Monitor report released this week, residential sales are anticipated to fall sharply in the short run, as new projects slated for sales will likely be postponed when the third wave of COVID-19 continues to hit the city.
Land registry data shows that average monthly transactions in the primary sales market amounted to 1,383 in the second quarter, higher than the average monthly transactions of 754 deals recorded in the first quarter, when the city was hit by the first wave of COVID-19.
JLL expects new residential projects scheduled for sale to be postponed until the outbreak is contained. In addition, any projects released during this time are expected to be priced more conservatively in order to appeal to buyers.
Hong Kong's residential market outperformed all other property sectors in the first half of the year and in early July, despite the economic uncertainties resulting from the outbreak. Relatively aggressive pricing in the primary sales market partly supported the resilient overall price trend. For example, the first batch of units at KOKO HILLS (Phase 1) in Cha Kwo Ling, developed by Wheelock Properties, was priced at an average of HKD 20,000 per sq. ft after discount. This equated to 15% more than the pricing of Grand Central, a project in Kwun Tong that launched in December 2018. Meanwhile, Sun Hung Kai Properties achieved the highest primary price range in Tuen Mun at HKD 15,000 to 20,000 per sq. ft for its new Regency Bay project. Pricing strategies adopted by developers appear to have remained relatively aggressive, reflecting their constructive views towards the sales market.
Henry Mok, Senior Director of Capital Markets at JLL in Hong Kong says, "The experience in the first half of 2020 suggests that while the outbreak of COVID-19 might have postponed market activity and project launch schedules, residential demand did not diminish visibly. Primary market sales will rebound after the outbreak is contained."
Nelson Wong, Head of Research at JLL in Greater China also comments, "For the second half of 2020, we remain cautious in light of the pandemic, a contracting economy, rising unemployment and bankruptcies, as well as on-going social tensions. However, loose liquidity arising from global monetary responses to COVID-19 should help to offset some of the weaknesses. As such, we expect mass residential prices to slip by 5 to 10% for the full year."