Hong Kong property: CK Asset prices first Blue Coast flats well below cost

And it is more than 20 per cent below cost, meaning the flagship developer of tycoon Li Ka-shing will make a significant loss on the inaugural batch.

“CK Asset’s pricing is very likely to put selling price pressure on other projects atop Wong Chuk Hang station,” said Will Chu, senior research analyst for Hong Kong and China property at CGS International Securities.

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“We can’t rule out the need for CK Asset to achieve a high sell-through rate for the first batch, otherwise it may be difficult for it to sell the remaining units.”

The developer has not yet announced the sales date for the first batch, but agents said it could launch next weekend.

The pricing of the project, set to be one of the biggest launched in 2024, is being keenly watched for signs of the likely speed and direction of the city’s housing market recovery.

Analysts had predicted CK Asset would price Blue Coast’s first units close to or slightly below cost in order to attract buyers in an uncertain market. However, the scale of the discount is likely to have surprised them.

Justin Chiu Kwok-hung, CK Asset’s executive director, said pricing property should not only take into consideration development costs, but also the market situation. He revealed last month that the cost of the project was HK$28,000 per square foot.

Southside in the Southern district of Hong Kong island has six phases, comprising 14 residential towers with a total of 5,200 units. Phases five and six have not yet launched.

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Blue Coast is part of phase three of Southside and is being developed in collaboration with transit operator and developer MTR Corp. It is set to be one of the biggest residential launches of 2024, with two phases totalling 1,200 units.

Last year, CK Asset surprised the market by launching its cheapest new homes in seven years. In doing so, it managed to sell all 655 units at its Coast Line II project in Yau Tong, earning it second place in the 20 best-selling major new developments of 2023, according to Dataelements, a data provider that tracks new residential properties in Hong Kong.

Blue Coast’s first batch at Blue Coast comprises 22 two-bedroom and 116 three-bedroom units, with areas ranging from 452 to 972 square feet. After the maximum 15 per cent discount, the flats are priced from HK$8.78 million to HK$23.1 million, or HK$18,998 to HK$24,072 per sq ft, the developer said on Thursday. That values the entire batch at HK$2.77 billion.

CK Asset’s Chiu pointed out there is still a very high inventory in the housing sector, although the Hong Kong property market is slowly recovering along with the economy.

The number of private completions in 2024 is forecast to reach 22,270 units this year, a 6 per cent year-on-year increase. Next year that will rise to 25,530, according to the data from Rating and Valuation Department released on Thursday. The supply is mainly concentrated in Kowloon and the New Territories.

The batch priced by CK Asset accounts for 11.5 per cent of all the flats at Blue Coast, which has the largest number of units available of all six residential developments atop the Wong Chuk Hang station, according to Chu of CGS International Securities.

“It is expected that the first batch of units will be sold out on the sales day and there is room for price increases,” said Sammy Po Siu-ming, CEO of Midland’s residential division for Hong Kong and Macau.

The project is likely to attract 30 per cent investors and 40 per cent buyers from mainland China and generate a rental return of around 3 per cent, he said.

Hong Kong’s primary property market has seen an immediate uptick since the removal of all property curbs last month.

First-hand transactions are expected to reach 4,300 in March, the highest monthly rate since 1998, Midland said.

Developers have accelerated their launches of new projects accordingly. Wheelock Properties’ Seasons Place in Tseung Kwan O sold 170 of the 282 units put up for the second round of sales on Wednesday.

The developer shifted its entire first batch of 368 units on offer on Saturday, recording sales worth HK$2.36 billion (US$301.8 million).

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