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Full sale ahead   Thanks to developer discounts, the time is right to buy into new luxury developments just outside of town, says Alex Frew McMillan     The savage downturn in the global economy has put a lot of people off doing property deals in Hong Kong. But brave buyers have been able to lock up what look like reasonable terms on high-calibre developments. Agents say the only buyers out there at the moment are bargain hunters. In the secondary market, they are looking for discounts of 30 percent to 40 percent off the peak price of a property, normally a high-water mark set near the start of last year. . In the primary market, properties are coming on the market from developers such as Kerry Properties and Hongkong Land, two of the city’s best-known luxury developers, both of which have sea-view projects on sale in quieter parts of town. To drum up sales, they have priced their properties below the price points they were expected to reach when they were launched. It’s the luxury end of the market that has been hardest hit by this downturn, since it was this sector that saw the greatest gains in recent years. So people looking to move up the property ladder, or looking to move out of a crowded downtown neighbourhood, may find this a good time to start taking the first steps. Residential prices fell 19 percent in the six months through November (according to the most recent data from the Hong Kong University Real Estate Index Series), thanks mainly to a 10 percent correction in November. But after some heady gains at the start of 2008, the net result is a one-year decline of only 6.9 percent. Market watchers say the slump hasn’t yet run its course. But developers are taking that into account and offering more attractive terms on new projects. The Sail at Victoria, a new residential building by Hongkong Land, is a case in point. The project is in Kennedy Town, on the very western edge of the development along Hong Kong Island’s crowded north shore. So it will be in walking distance of the MTR once that expands to Kennedy Town. It is also at the foot of Mount Davies and around the corner from the green and leafy environs of Pokfulam. Hongkong Land of course owns much of Central, acting as the landlord for prestigious office buildings such as Jardine House, the three Exchange Square buildings and the Prince’s Building. But it doesn’t do many residential developments – its last project was the Ivy on Belcher’s, which was completed in August 2004. “We try to focus on quality rather than quantity,” says Cherrie Lai, Hongkong Land’s head of residential property. She feels the new complex, which has 95 flats, is in keeping with the company’s ‘limited edition’ frame of mind.The Sail couldn’t have come up for sale at a much worse time. The project is now under construction and due for completion at the end of 2009. The developer started early ‘expression of interest’ sales in the slow week ahead of Chinese New Year, perhaps in the knowledge that residential property prices and, more importantly, office rents are forecast to continue to slide this year. Interest was high from potential buyers, with 94 people registering via the company’s website. Of course, the company had no idea if they were seriously shopping or just keen to browse. They have a better idea now. Of the 20 apartments launched in the week before the Lunar New Year, 15 sold, according to Colliers, at an average price of HK$9,703 per square foot. That’s a little lower than the going rate for 10- or 20-year old apartments nearby in the low-rise neighbourhood of Pokfulam, and below the HK$12,000 per square foot that appraisers suggested the project could fetch when it was planned. Victoria Allan, managing director of the brokerage Habitat Property, says the discount was necessary given the current slump. It’s not a steal but probably a fair price for a developer with a good brand name. Another ‘new’ development on the south side of Hong Kong Island is also launching at a reduced price. Early forecasts for the Belgravia, the Kerry Properties building in Repulse Bay, suggested that it would command HK$13,000 to HK$15,000 per square foot. According to Colliers, all 24 apartments put on the market near the start of the year sold out, at an average price of HK$13,803 per square foot. There are 50 apartments in all. So the units sold at the low end of forecasts, but still fetched the highest price at the turn of the year for a ‘new’ development, by some stretch. The Belgravia is not actually new but is instead a 29-storey building that the Hong Kong-based developer opened in 1989. Kerry Properties refurbished the property last year, installing Sub-Zero refrigerators, Miele wine fridges and ovens, and Poggenpohl kitchen cabinets. They are big units – 2,390 square foot for a three-bedroom flat and 2,790 square foot for a four-bedroom. The beach is a small hop from the front door, so buyers can be more convinced about the Belgravia’s place near the top of the luxury-property tree. The apartments at the Sail at Victoria don’t command the same kind of price tag, since Kennedy Town is more gritty and undergoing gentrification, and the apartmentsare smaller. They range from 663 square feet for a one-bedroom flat to 1,429 square feet for a four-bedroom, which critics say is a little small for luxury property. “That is a beautiful location right on the water,” Allan says. “It’s a shame they didn’t do a bigger unit in there, a 2,500 or 3,000 square-foot flat with a good view.” But the price is attractive for a sea-view complex that is likely to be well-run and well-finished – Hongkong Land has a reputation for high-end appliances and materials. The bathroom fixtures are from Kohler and Hansgrohe, while the oven and dishwasher are Gaggenau. The apartments at the Sail have relatively good efficiency, at 78 percent, and are generally bigger than the units at nearby complexes such as the Merton, developed by New World Development. Lai hopes they will attract younger buyers to Hongkong Land, which celebrates its 120th anniversary this year. Eco-conscious homebuyers will be glad to note that both the Sail and the Belgravia boast a number of green features. At the Sail the podium facade is finished with natural granite, an aluminium grille and cladding. A curtain wall system has been installed in the high zone of the tower. Granite, sandstone and wood veneer feature throughout the interiors and the sky garden is filled with plants to improve air quality around the building. At the Belgravia, Kerry Properties has gone one step further installing a centralised vacuum cleaning system and air purifying system. Every window is also fitted with double-glazed, low-E glass to maximise comfort and energy savings year round. Both properties get a high level of promotion since they are ‘primary market’ sales of new apartments. But agents caution against reading too much into these sales figures, which they say attract the most interest from speculators. It’s also not unusual for investors to buy in bulk, paying a high price for one apartment but getting a discount on others in the building. To get a better read of the overall market, it makes more sense to look at secondary sales. Buyers looking to find deals there may be disappointed. Allan says there have been some distressed sales in bigger luxury complexes such as the Bel-Air in Cyberport and the Legend in Tin Hau. But with mortgage rates low, many owners are trying to sit the slump out. “There have been a couple of people who need to sell, but not as much as we expected,” Allan says. “Why sell if you can hold?” Click here for more on home decorating