Craze over new Hong Kong housing project shows pent-up demand

A new residential project in Hong Kong has been oversubscribed by more than 33 times in the first week of sales, underscoring demand for housing in the world's most expensive property market.

The Pavilia Farm, developed by New World Development Co. and MTR Corp., received around 13,000 registrations for the 391 apartments on sale as of early Wednesday, according to a person familiar with the matter, who asked not be named because the information isn't public.

The first phase of the project consists of two towers on top of the Tai Wai train station in the New Territories, about a 40-minute commute to Hong Kong's city center. The price of as low as HK$16,618 ($2,140) per square foot and proximity to public transport are the project's main drawcards.

The price is about 16 per cent cheaper than the average selling price of properties in the Sheung Wan area, an area closer to the city center and popular with expats, according to Bloomberg calculations based on Centaline data.

Demand for the project, which will have 2,198 units in its first two stages, should help New World beat its Hong Kong contracted sales target of HK$20 billion in the fiscal year started July 1, said Bloomberg Intelligence analyst Patrick Wong.

Hong Kong home prices have proven resilient even amid the pandemic-induced recession and political turbulence. Prices in the secondary market are little changed from the start of the year, Centaline data show.

With its sky-high property prices, the city has one of the highest risks of a housing bubble this year, according to UBS Group AG. Hong Kong is ranked as the fourth most risky city behind Munich, Frankfurt and Toronto.

Residential property values will rise by around five per cent a year in the next two to three years due to limited supply and low interest rates, said Cusson Leung, head of Asia property research at JPMorgan Chase & Co. - Bloomberg