Everything about Landscope Christie's International Real Estate and the Hong Kong luxury property market
The market is entering a nostalgic mood. While people are reminiscing the good â€œoldâ€ days of 2007 and early 2008, property prices cannot defy the law of physics and retreat to their 2005 levels. Many buyers who fought so hard to grab a piece of the action in 2007 especially for those first hand sales are now seeing helplessly 30% of their asset value evaporate, if not regretting entering the market at all.
As expected, when the festive atmosphere dries up after Chinese New Year, bad news come one after another. Mass layoffs, wage reductions, business closures, escalating unemployment rate and under-performing stock market all add up to dampen property price. In 2007 and early 2008, primary sales hit records which were well beyond 1997 level. Many of these properties are due for completion in late 2008 and early 2009. There is already tremendous pressure on developers to slash price. But what gives them more headaches is that many of the buyers who paid a high price are walking away, forfeiting the deposit. Properties deemed sold are now back in the hand of developers, but with a significantly reduced value. Faced with an increased inventory, developers are cutting price fiercely. In Wanchai, a developer is offering discounts up to 20% to those buyers who had already paid deposits for fear that they walk away. In Aberdeen and Hunghom, some are making straight cut of up to 40% on their 2007 price. In Pokfulam, a foreign property investment fund had to renegotiate with the seller-developer to reduce its purchase bulk of a residential tower as the current price is 20% below their acquisition. Other unsold projects on Hong Kong Island, Kowloon and the New Territories fare no better. Developers are scrambling for the last remaining buyers with price cuts and other benefits including pre-approved mortgages. There is no place in Hong Kong that can escape this wave of price war.
The questions these days are â€œHow much more to slide?â€ and â€œHow long to go before price stabilizes?â€ While there are many economic models as there are variations of statistics, I am afraid there are no clear and ready answers to the above questions. Experts may come up with various projections, but the true answer can only reveal itself with hind sight. However, one thing can be certain, that is, the uncertainties will continue to linger amid economic woes.
By Claudia Hui