Sun Hung Kai Lifts Prices at New Luxury Home Project

Sun Hung Kai Properties Ltd., Hong Kong’s biggest developer by market value, is raising prices for a new luxury residential project by 5 percent after selling 150 units in 10 days.
“The response has been so good, we are raising the prices gradually,” Victor Lui, executive director of Sun Hung Kai Real Estate Agency, said in a phone interview today.
The builder, which released 200 apartments at its Kowloon project in the first launch, sold the 150 units for HK$14,000 to HK$20,000 ($1,806-$2,580) a square foot, generating HK$3.5 billion revenue, Lui said. It’s now selling three-bedroom units at the project, called The Cullinan, for HK$14,700 to HK$21,000 a square foot, based on Bloomberg calculations using his figures.
The sale may indicate investment in Hong Kong’s luxury homes is picking up, Centaline Property Agency Ltd., one of the city’s biggest real-estate agencies, said. Prices of luxury homes, defined as those worth at least HK$10 million, fell 19.2 percent in the fourth quarter from a year earlier, CB Richard Ellis Group Inc. said last week.
“There’s a bunch of cash-rich people out there who prefer holding real assets such as property, gold as they become more wary of other financial investments,” said Wong Leung-sing, an associate director at Centaline. “Under the current environment, The Cullinan sale has exceeded expectations and it’d be a harbinger of an increasingly active investment luxury market.”
Sun Hung Kai’s shares rose as much as 4.2 percent on the news, the most since Feb. 9. They traded 0.8 percent higher at HK$60.65 at 3:05 p.m. Hong Kong time, while the Hang Seng Property Index, which tracks the shares of six developers, advanced 2.7 percent.

Hang Lung Properties
The number of units sold and the revenue generated were earlier reported by the South China Morning Post.
Prices fetched at The Cullinan may entice Hang Lung Properties Ltd., Hong Kong’s fourth-biggest developer by value, to sell units at its nearby Harbourside project, analyst Manfred Ho said. Shares of Hang Lung rose as much as 6.9 percent today, snapping a nine-day losing streak. They traded 4.7 percent higher at HK$14.30.
Hang Lung has “quite a big number of unsold units at The Harbourside, so if The Cullinan is selling well, definitely they will be one of the direct beneficiaries,” said Ho, a Hong Kong- based analyst at BOC International Group.
Hang Lung has about 2,000 homes unsold at its Harbourside and Long Beach developments in Hong Kong, as it held back apartment sales last year after prices fell as much as 25 percent from last year’s peak.
Sun Hung Kai may start selling the second batch of units next week, Lui said, adding the developer will decide on the number after wrapping up the first launch. Buyers in the first launch included investors from China, he said.
Sun Hung Kai is also in the final stages of negotiating the sale of four penthouse units, Lui said. One of them, a 4,000 square-foot duplex, is priced at HK$50,000 a square foot while the other three smaller ones at more than HK$30,000, he said.
Standing at 270 meters, The Cullinan will be Hong Kong’s tallest residential project and includes 825 units.

Still Under Pressure
Still, some analysts said prices for The Cullinan are not enough to lift the entire Hong Kong property market, which is weighed down by a recession and rising unemployment.
“Hong Kong’s economy is really dependent on the financial sector, which is volatile, and trade, where we don’t see any sign of improvement,” Cusson Leung, an analyst at Credit Suisse Group AG, said by phone today.
Hong Kong’s economy slid into a recession in the third quarter, its first since 2003, as the global slowdown hurt domestic spending and demand for exports. Unemployment rose to 4.6 percent in the three months ended Jan. 31, the highest rate since September 2006, the government said Feb. 17.
Home prices on the Peak, Hong Kong’s most-expensive residential area, slumped 30.5 percent in the fourth quarter of 2008 from a year earlier, the steepest decline since the Asian financial crisis in 1998, CB Richard Ellis said last week. The average price was HK$16,678 a square foot, it said.
Hong Kong’s record price for a luxury home was for a house in Sun Hung Kai’s Severn 8 project on the Peak that sold in the first half of last year for almost HK$56,000 a square foot.


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