Firstbatchof50unitsofTheSummawithASPofHK$22,989psf
KerryProperties/WinfordGrouplaunchedthefirstbatchof50unitsatTheSummatodayataverageASPofHK$27,202/sf.TotallistedpriceforthefirstbatchrangedfromHK$17.9mnforunitson10/FofBlock2toHK$49.9mnon30/FofBlock1.Theunitsbeinglaunchedismainly2-3bedroomunitslocatedmostlyonthe10-32/Ffloorzone.Similartoothernewprojectlaunchesrecently,buyersofthefirstbatchareentitledtomaximumdiscounts/rebatesofupto15.8%ofthelistedprice.
Discounts/rebatesofupto15.8%oflistedpriceareoffered
5%discountforcashbuyers;2%discountfortakingupsecondmortgageplans,3%discountforSalesandPurchaseagreementsignedbeforeFeb28andrebatesonstampdutiesrangingfrom7.5%to8.5%(unitspricedbelowHK$20mnareentitledto7.5%rebatewhileunitsaboveHK$21.7mnareentitledto8.5%rebate).Adjustedforthesediscounts/rebates,theeffectiveASPisaveragedatHK$22,989/sf.
EffectiveASPstillatasizeablepremiumoversecondaryprojectsnearby
Againsttherecenttrendofpricingatadiscounttomarket,effectiveASPforKerry’sTheSummaprojectisstillatasignificantpremiumoverthesecondaryprojectsintheimmediateneighborhood.Forexample,latesttransactedpriceatTheBelcher’sisaboutHK$18,500/sf,whichsuggeststhepricingofTheSummaisata24%pricepremium.Inlightofdeterioratingfundamentalsaheadincludingpotentialtighterliquidity,anincreaseinnewsupplytogetherwithasofteconomy,webelievethepremiumpricingstrategyofTheSummaisalessidealapproachandmayleadtoslowsalesperformance.
CautiousoutlookonHongKongpropertymarketin2014
Theprimarymarketsawamarkedvolumerecoverysincemid-Octboostedbynumerouslaunches.However,wearenotseeingthecorrespondingrecoveryinthesecondarymarket.Inourview,themixedperformancesuggeststhatrecentstrengthintheprimarymarketsimplyimpliesbuyingdemandflowingfromsecondarytotheprimaryonvariousincentivesofferedbydevelopers.
Withupto33,489primaryunitsavailableforsalein2014,developersarelikelytoadoptacautiouspricingstrategy,whichislikelytodepresssecondaryprices.Weexpecttoseeupto20%declineinresidentialpricesin2014.
PrefernameswithbiggerexposureinChina:SHKP/Wharf/HangLung
WeareincreasinglyconcernedontheoutlookoftheHongKongpropertymarket.OurtoppicksareSHKP,WharfandHangLungbecauseoftheirgoodexposuretoChina.WealsolikeCheungKongasaninexpensiveproxytobuyintoHutchison.WehaveaSellrecommendationonHongkongLand.Risks:swingsinHKeconomy,interestratehike,unexpectedfluctuationsintheChineseeconomy.