Sun Hung Kai Properties speeds up sales as vacancy tax looms, finishing more than half of entire year’s target within 10 weeks
‘The government wants developers to sell flats fast, and we also want to launch more [units on the market]. So it is our strategy and also our response to the government’s policy,’ said Raymond Kwok of Sun Hung Kai Properties.
Sun Hung Kai Properties, Hong Kong’s largest developer by market capitalisation, said it netted contract sales totalling HK$27 billion (US$3.44 billion) in just 10 weeks, rushing to sell in advance of looming properties measures including a vacancy tax as well as rising mortgage rates.
The amount was equivalent to 63.5 per cent of HK$42.5 billion, the sales target in Hong Kong the developer set for the coming financial year.
“The government wants developers to sell flats fast, and we also want to launch more (units on the market). So it is our strategy and also our response to the government’s policy,” said Raymond Kwok, chairman and managing director of Sun Hung Kai Properties.
The sharp increase in contract sales follows the introduction of the vacancy tax by Chief Executive Carrie Lam Cheng Yuet-ngor on June 29, as well as other measures to unlock extra housing supply and cool down the city’s property market.
SHKP, the largest holder of completed new flats in Hong Kong, is under pressure to sell down its stockpile.
The developer sold 593 flats at Cullinan West II atop Nam Cheong Station, which contributed HK$7 billion in the past three weekends. Meanwhile the company’s Park Yoho Milano has sold about 470 units, generating more than HK$3.5 billion.
Since July, it has also sold a number of super deluxe projects, including two houses at Twelve Peak at the city’s famous Peak – the highest point on Hong Kong Island – for HK$1.2 billion and 72 units at Victoria Harbour in North Point for HK$1.1 billion, according to dataelement, a data provider for new flats in Hong Kong.
In its latest move, the city’s largest developer released the first price list of 144 units of Park Yoho Napoli in Yuen Long on Tuesday, only 11 days after the project received presale consent.
Victor Lui, deputy managing director of the developer said that Park Yoho Napoli will be launched over the next two weeks.
Analyst believe that the prices of SHKP’s Park Yoho Napoli will be more conservative as the developer would like to attract buyers.
“The sentiment is down as uncertainties rising,” said Raymond Cheng, a property analyst with CGS-CIMB Securities.“If the price is set too high and the units put onto the market cannot be sold, then it will create a signal of bad property market, which is the last thing the developers would like to see.”
The tax applies to all newly completed flats that have been left vacant for six months in a year. Flats are considered completed one year after the developer obtains an occupation permit.
The proposed tax would be equivalent of two years of rental income, calculated by government specialists and based on market rates.
On Thursday, the developer reported core profit, which excludes revaluation gains on investment properties, rose 17.1 per cent to HK$30.4 billion for the year to June 30, according to the company filing to the Hong Kong stock exchange, mainly driven by strong property sales.
The developer, which has a diversified portfolio of flats, retail and office space in both Hong Kong and mainland China, increased its final dividend by 15 per cent to HK$3.45 per share, from HK$3 a year ago.
For the year ended June, net profit jumped 19.6 per cent to HK$49.95 billion due to bigger revaluation gains on investment properties. The net profit included a HK$19.98 billion revaluation gain on investment properties, compared to HK$16.85 billion a year ago.
Turnover rose 9.5 per cent to HK$85.64 billion.
The Kwok family is the controlling shareholder of SHKP and one of Hong Kong’s wealthiest dynasties. Walter Kwok Ping-sheung, the eldest of the Kwok brothers, was taken to hospital after a heart attack last month.
The former chairman of Sun Hung Kai Properties was released from the original hospital he was at and is now recovering at Hong Kong Adventist Hospital, where Raymond Kwok confirmed at today’s briefing that his brother is in stable condition.
SHKP’s shares rose by 1.5 per cent to close at HK$114.7 on Thursday, before the release of the earnings results.
