SHKP tweaks project design again as Hong Kong’s housing flatline shows no pickup in sight

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SHKP tweaks project design again as Hong Kong’s housing flatline shows no pickup in sight

Sun Hung Kai Properties (SHKP) said it would tweak the design of its housing project in Hong Kong’s Tuen Mun district for the second time, as it buys time before adding to the city’s inventory of unsold homes amid a worsening property slump.

The project, developed with Hanison Construction Holdings, is undergoing “design changes [with] adjustments in the progress and work processes on site, [where] the temporary suspension of some of the works may not be ruled out”, according to a statement.

The move by Hong Kong’s most-valuable developer could herald more delays, as the discount war among competing builders gathers momentum amid deteriorating sales. SHKP, an industry bellwether in the market, said a redesign would require it to resubmit its paperwork to the government for approval before construction can begin anew.

This is the second time since 2018 that SHKP has sought to redesign the Tuen Mun project, comprising seven towers of between 11 and 20 floors at the junction of So Kwun Wat and Kwun Tsui roads. The previous tweak boosted the total number of flats sixfold to 1,326 by cutting the average unit size by 64 per cent, according to the Post’s report six years ago, citing a government document.
The Avignon housing project in Tuen Mun, jointly developed by Sun Hung Kai Properties and Hanison Construction Holdings, in January 2014. Photo: Handout

The developer said it did not dismiss any staff due to the adjustment of the project, and that the affected workers would be reassigned to other projects.

“The main reason [for the project’s possible delay] could be the poor market conditions for the primary land sales in the New Territories,” said Alex Leung, senior director at CHFT Advisory and Appraisal.

The shell and core of SHKP’s residential blocks have been completed, Leung said, adding that he believes 60 per cent to 70 per cent of the construction cost has been incurred.

Hong Kong’s developers are scrambling to come up with strategies as a pipeline of 109,000 new homes may flood the city over the next three to four years, adding to the glut amid a sales slump. Rents are rising while sales prices continue to drop, as new emigrants to Hong Kong choose to lease instead of owning.

At least two developers in the Wharf group, which build high-end homes and operate shopping centres, have warned of losses in the first six months of the year.

New residential projects in Tuen Mun and Kai Tak, with abundant land supply, have been aggressively slashing prices to attract buyers.

Early Light International Holdings priced the first batch of its Uppland project at an eight-year low earlier this month. The developer sold all 188 flats during its July 20 launch, and cleared 85 per cent of 139 units in a subsequent offer a week later.

Still, SHKP is actively bidding for new land, and building new homes elsewhere. It plans to build 600 flats with 308,144 sq ft of permissible gross floor area on a site measuring 98,898 sq ft in Fanling through a land exchange scheme.

The developer also won a government land tender in the New Territories at a price in the “middle-range” of market expectations this month.
SHKP was the winner in a field of 11 bidders for the 2,425 square-metre site in Yuen Shun Circuit in Siu Lek Yuen, Sha Tin, the only residential plot offered during the April to June quarter. The parcel of land, which can support around 280 flats, went for HK$619 million (US$79.29 million) or HK$3,952 per square foot, according to Lands Department filings.

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