Hong Kong homebuyers snap up Sun Hung Kai’s Silicon Hill flats for the second weekend in a row, aiming to get ahead of higher interest rates

Every one of the 198 flats on offer – including eight for sale by tender – at the project at Pak Shek Kok in Tai Po district sold out, according to sales agents
The flats, ranging from 217 to 770 square feet (71.5 square metres), were priced between HK$3.79 million and HK$11.34 million (US$1.44 million) after discounts

Weekend Property

Yujie Xue

Published: 7:25pm, 11 Jun 2022

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Sun Hung Kai Properties (SHKP)’s Silicon Hill flats have sold out for the second consecutive weekend, as homebuyers plunged into Hong Kong’s housing market to get ahead of higher interest rates.

Every one of the 198 flats on offer – including eight for sale by tender – at the project at Pak Shek Kok in Tai Po district sold out, according to sales agents.

The flats, ranging from 217 to 770 square feet (71.5 square metres), were priced between HK$3.79 million and HK$11.34 million (US$1.44 million), or HK$16,427 to HK$20,354 per square foot after discounts of up to 17.5 per cent. The results of the eight units sold through tender were not released yet.

The sell-out launch marked the second bumper weekend for SHKP, which sold all 170 flats the previous weekend, a successful campaign that gave the developer the confidence to raise the average price by 0.9 per cent over one week.

The construction site of Sun Hung Kai Properties’ Silicon Hill in Pak Shek Kok in Tai Po on 7June 2022. Photo: Xiaomei Chen

“The discounts and the low price were the first reasons for the strong sales result,” said Sammy Po, the chief executive of Midland Realty’s residential division in Hong Kong and Macau. “The average price per square foot is lower than the price of second-hand properties in Pak Shek Kok.”

The city’s base lending rate rose by 50 basis points in May to 1.25 per cent, after the US Federal Reserve raised its rate by half a point, the biggest one-time increase in Fed rates since 2000.

People line up at ICC for SHKP’s second round sale of 198 units of Silicon Hill in Tai Po on 11 June 2022. Photo: Xiaomei Chen

The Fed has signalled 10 increments in US interest rates, raising the Fed rate from zero to 2.6 per cent by the end of this year, and to 3.75 per cent by the end of 2023, economists said.

Hong Kong’s biggest banks are holding their prime rates unchanged for now, with HSBC, Bank of China (Hong Kong) and Hang Seng Bank keeping it at 5 per cent, while Standard Chartered and Bank of East Asia held their rate steady at 5.25 per cent.

In the previous cycle, the city’s banks waited through nine consecutive increments of 25 basis points each by Hong Kong’s monetary authority before raising their prime rate by 0.125 percentage point in 2018, passing some of the higher borrowing costs to customers for the first time in a decade.

Still, property buyers are not taking their chances, seeking to get ahead of higher interest rates. Silicon Hill’s strong sales also benefited from the proposed Pak Shek Kok railway station which is expected to launch in the future and improve transport in the area, according to Po. The project is also attractive to young homebuyers due to its low density, which is more comfortable to live in, Po said.

Hong Kong’s property market sentiment improved in June, even as the city is still wallowing in one of its worst economic contractions on record amid a persistent Covid-19 outbreak. The city’s borders with southern China remained closed, leaving the housing market to rely on demand from the city’s residents, said Louis Chan, Asia-Pacific vice-chairman and chief executive of the residential division at Centaline Property Agency, in a note on Saturday.

Around 70 to 80 per cent of the customers who attended SHKP’s sales launch on Saturday were buying for their own use, while around 20 per cent were looking to add the flats as investments for rental purposes, according to Chan.

The Silicon Hill project has been favoured by customers who plan to buy the property and use that to collect rent. As more overseas students in Hong Kong will be looking for apartments for rentals in the city this summer holiday, it will also promote the rental transactions of the project, Chan said.

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