Last year, Sino Land tested the waters in a stagnant housing market with their new Kwun Tong development, Grand Central, and came back with a big win—selling more than 1,500 units in six months and making over HK$18 billion. Looking to the future, Victor Tin, Sino Land’s associated director (sales), says the second half of 2019 will be dominated by luxury homes. Amongst Sino’s projects this year, the redevelopment of CLP Group’s former headquarters will be the first to roll out and the most expensive development in the group’s history in terms of construction costs. It might just set a new record for Kowloon luxury home prices.
The housing market cooled down during the fourth quarter of 2018 amidst an escalating trade war between China and the US. Small- and medium-sized housing estates took the biggest hit, suffering a 10% to 20% drop in home prices as well as a decline in sales volume.
Just when the market was bracing itself for a deep plunge, however, Grand Central—a redevelopment project co-developed by Sino, Chinese Estates Holdings and the Urban Renewal Authority—was swiftly launched, turning the tide and driving the market into an unexpected rebound. Tin attributes the surprising success of Grand Central to a combination of advantageous factors, as well as the hard work and collaboration of all teams.
“There is always a large demand for homes measuring 600 square feet or below, so Sino has never worried about the sales of those properties,” he adds. “The fact that we launched it during a time when the market was experiencing a supply gap really helped the sales. It was the perfect timing.”
Grand Central: A New Classic
Kwun Tong is positioned as a core area in the government’s long-term project Energizing Kowloon East, which aims to develop Kowloon East into the city’s new CBD. Over the past few years, the district has created new jobs and attracted a slew of international corporations to set up offices, driving up the local demand for premium homes. Boasting a premium location, Grand Central possesses tremendous appeal to investors looking to lease out properties in the up-and-coming Kwun Tong.
Tin attributes Grand Central’s new classic status to a variety of factors, including its advantageous location and versatility, as well as the fact that it was the first large development for the area in a long time.
Sino Land has several luxury offerings slated for the second half of 2019, led by the aforementioned redevelopment at 139-147 Argyle Street in Ho Man Tin. Sino Land won the tender for the project at the end of 2017 and paid HK$2.02 billion in land premium (averaging HK$6,500 per square foot) at the beginning of last year.
The development covers 62,000 square feet of land, providing a total residential floor area of 309,700 square feet and non-residential floor area of 31,000 square feet. The plan for constructing three 25-storey (including five floors of podiums) residential towers has been approved. Upon completion, it will have 175 housing units as well as a club, lobbies, parking spaces and other facilities on the podium floors.
Living in An Uptown World
Of the new project, Tin reveals that majority of its units will be three- and four-bedroom flats, most overlooking Kadoorie Hill and Kowloon Tong. “The company has recruited world-class architects to design this project. Its construction costs will surely be the highest that we’ve ever seen in our history,” he adds, predicting that the development’s per-square-foot price may be a record for Kowloon flats. The most expensive apartment in Kowloon at the moment is a penthouse unit at The Arch, sold in late 2016 for HK$420 million, or HK$99,414 per square foot—a record that has remained unchallenged the past two years.
Sino Land is more than familiar with the luxury home market in the neighbouring areas, having built Mount Beacon and One Mayfair in Kowloon Tong, which sold for top prices back in the day. “There has always been a strong demand for premium luxury homes in Ho Man Tin, especially from existing homeowners in the neighbourhood, industrialists from both Hong Kong and the mainland, as well as children of wealthy parents,” he says.
“The young generation that grew up in this neighbourhood are now looking for their own homes, and their parents want them to live nearby,” Tin explains. “Most importantly, Ho Man Tin hasn’t seen a new, sizable luxury development in a very long time. This opportunity to collaborate with CLP Group is therefore extremely significant for us, and we are willing to do whatever it takes to make it a truly top-class luxury development.”
When asked about the former CLP headquarters’ iconic bell tower, Tin says that the company has handled several heritage conservation projects in the past, including the Tai O Heritage Hotel (formerly the Tai O Police Station) and the Fullerton Hotel Singapore (formerly the General Post Office), and has been working closely with CLP Group to preserve the bell tower. Sino is confident that the new development will seamlessly combine the headquarters’ original architectural features with modern designs.
As for Sino Land’s upcoming projects in 2019, Tin reveals the launch of a Tui Min Hoi development in Sai Kung, which includes seven houses with areas between 2,500 and 3,300 square feet, and 26 flats measuring 1,100 to 1,300 square feet each. Another project in Ma On Shan will supply approximately 90 three- and four-bedroom flats upon completion. In other words, all of Sino’s remaining offerings this year are luxury homes. Meanwhile, the West Rail Kam Sheung Road station project in Yuen Long and the Reclamation Street redevelopment project in Mongkok are scheduled to launch in 2020.
Given the low interest rates and strong purchasing capacity from buyers, Tin thinks housing prices will grow by 5 to 10% in the second half of 2019. He adds that while mortgages with high loan-to-value (LTV) ratios are widely offered in the market, there aren’t actually many takers. A lot of Sino’s buyers who initially opt for high LTV mortgages later switch to cash payment plans, indicating their strong financial footing. “We’ve had some buyers that chose 70% LTV mortgages at first and ended up only borrowing 50%,” he says.
Tin observes that there is an abundance of funds in Hong Kong, adding that apart from the large demand for self-use homes, investors and those looking to upgrade to bigger homes are another major market driver, so the housing market is expected to grow steadily and continuously throughout this year.