(Bloomberg) -- Sun Hung Kai Properties Ltd., Hong Kong’s biggest property developer, is marketing a new project at a 20% discount to lure buyers after a recent interest-rate reduction.
The company’s Cullinan Sky project in the former airport Kai Tak area was priced at HK$19,668 ($2,525) per square foot on average for its first batch, it said. That’s about 20% lower than the stock in new projects nearby, according to Midland Realty.
Despite Hong Kong banks’ rate cut last week, the property market still faces obstacles including an excess inventory of homes and a weak economy. Ample new supply — with the unsold backlog standing at a 20-year high — will limit any significant rebound in the residential market, according to Bloomberg Intelligence.
Sun Hung Kai is confident in its sales prospects given the start of the rate-reduction cycle and rising residential rents, Victor Lui, deputy managing director, said on Monday. The developer will actively plan new project launches in the next few weeks, he added.
In an early sign that homebuyers aren’t seizing on the drop in interest rates, the city recorded the fewest weekend sales in two months as demand remained weak from mainland Chinese buyers and investors.
Most major banks in Hong Kong including HSBC Holdings Plc lowered lending rates after the Hong Kong Monetary Authority reduced its base rate by half a percentage point, keeping in step with the US Federal Reserve last week.
The effective mortgage rate is now at 3.875% after the cut, down from 4.125% previously, according to mReferral Mortgage Brokerage Services.
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