HONG KONG (Reuters) — Cash-strapped
Chinese are scrambling to sell their luxury homes in Hong Kong, and
some are knocking up to a fifth off the price for a quick sale, as a
liquidity crunch looms on the mainland.
Wealthy Chinese were blamed for pushing up property prices in the
former British territory, where they accounted for 43 percent of new
luxury home sales in the third quarter of 2012, before a tax hike on
foreign buyers was announced.
The rush to sell coincides with a forecast 10 percent drop in
property prices this year as the tax increase and rising borrowing
costs cool demand. At the same time, credit conditions in China have
tightened. Earlier this week, the looming bankruptcy of a Chinese
property developer owing 3.5 billion yuan ($565.25 million)
heightened concerns that financial risk was spreading.
"Some of the mainland sellers have liquidity issues — say, their
companies in China have some difficulties — so they sold the houses
to get cash," said Norton Ng, account manager at a Centaline
Property real estate office close to the China border, where luxury
houses costing up to HK$30 million ($3.9 million) have been popular
with mainland buyers.
Property agents said mainland Chinese own close to a third of the
existing homes that are now for sale in Hong Kong — up 20 percent
from a year ago. Many are offering discounts of 5-10 percent below
the market average — and in some cases as much as 20 percent — to
make a quick sale, property agents and analysts said.
"GHOST TOWN"
In a Hong Kong housing development called Valais, about 10 minutes
drive from the Chinese border, real estate agents said that between
a quarter and a half of the 330 houses are now on sale. At the
development's frenzied debut in 2010, a third of the HK$30-HK$66
million units were sold on the first day, with nearly half going to
mainland China buyers.
Dubbed a "ghost town" by local media, the development built by the
city's largest developer, Sun Hung Kai Properties Ltd <0016.HK>, is
one of many estates in Hong Kong where agents are seeing an
increasing number of Chinese eager to sell.
"Many mainland buyers bought lots of properties in Hong Kong when
the market was red-hot three years ago," said Joseph Tsang, managing
director at Jones Lang LaSalle. "But now they want to cash in as
liquidity is quite tight in the mainland."
A spokesman for Sun Hung Kai said the current occupancy rate at
Valais was 75 percent, and most of the second-hand units for sale
were "looking for a good selling price and not eager to sell at deep
discounts."
In a nearby development called The Green — developed by China
Overseas Land & Investment <0688.HK> — about one-fifth of the houses
delivered at the start of this year are up for sale. More than half
of the units, bought for between HK$18 million and HK$60 million,
were snapped up by mainland Chinese in 2012.
China Overseas Land was not immediately available to comment.
"Some banks were chasing them (Chinese landlords) for money, so they
need to move some cash back to the mainland," said Ricky Poon,
executive director of residential sales at Colliers International.
"They're under greater pressure from banks, so they're cutting
prices."
In West Kowloon district, an area where mainland Chinese bought up
close to a quarter of the apartments in many newly-developed
estates, some Chinese landlords are offering discounts on the
higher-end, three- to four-bedroom apartments they bought just a few
years ago.
This month, a Chinese landlord sold a 1,300 square foot (121 square
meter) apartment at the Imperial Cullinan — a high-end estate
developed by Sun Hung Kai in 2012 — for HK$19.3 million, 17 percent
less than the original price. The landlord told agents to sell the
flat "as soon as possible," said Richard Chan, branch manager at
Centaline Property in West Kowloon.
In the same area, a 645 square foot, 2-bedroom flat in the Central
Park development was sold in just two days after the Chinese owner
put it on the market at HK$6.5 million in what agents called the
year's best bargain — the cheapest price for a unit of its kind over
the past year.
"The most important thing for them is to sell as soon as possible,"
Centaline's Chan said. "In the past two weeks, those who were
willing to cut prices were mainland Chinese. It is going to have
some impact on the local property market, that's for sure."
($1 = 7.7669 Hong Kong dollars)
($1 = 6.1920 Chinese yuan)
(Editing by Anne Marie Roantree, Emily Kaiser and Ian Geoghegan)
