Hong Kong Property:Be nimble

Impact

Direct competition to kick-start in Kai Tak CBD2 regions. We expectdirect competition to happen in Kai Tak, with both K Wah’s K City (900 units,) and Poly’s Vibe Centro (930 units, 龍譽). The former recently obtainedits presales permit. Both projects focus on 1/2-bedroom apartments. K Wah(173 HK) priced the first 180 units at HK$18.0k psf, an average price ofHK$8.7m/unit. Management said the project has been 3.3x oversubscribedand 10% of potential buyers are from the mainland. Buyers in Kowloonaccounted for ~60%, slightly lower than that of COLI’s One Kai Tak (II).

The good – New World’s The Pavilia Bay. Since its debut in January, NewWorld (17 HK) sold 744 units (76% of 983) generating revenue of HK$6.8bn.

It released a fourth batch (114 units) for sale last Friday and delivered a takeuprate of 49%, compared to >90% in the first three rounds (~700 units).

The surprising – Nan Fung’s Island Garden. Sales performance wassatisfactory after a price cut of 6% in early February. A new batch of 60 unitswas released for sale over the weekend and delivered a take-up rate of 92%.

For 99 units sold, ~82% of buyers adopted an 85% LTV scheme with a 3-yearof deferment of repayment option.

The disappointing – Kerry’s The Bloomsway. Kerry (683 HK) released anew batch of 66 units at its Tuen Mun project over the weekend and receiveda weak take-up rate of 12%. Seven units were sold at an average price ofHK$10.9m/unit. Company has cumulatively sold ~890 units of the project(~81% of 1,100 units) since its launch in late 2015.

Upcoming key launches include K Wah’s K City (900 units), Poly’s VibeCentro (930 units), Sun Hung Kai’s Cullinan West (1,050 units), CK Property’sCrescendo (67 units) and Henderson Land’s Eden Manor (590 units).

Outlook

Our picks are Sun Hung Kai Properties, New World and Link REIT.