2025-02-21 28Hse Editor
The real estate market is unpredictable. To adapt to the constantly changing economic environment, as well as to the distinct positioning and competition levels of new projects, developers frequently alter their marketing strategies. Recently, a property was initially launched with a fixed price list; however, it was later decided that the units would be sold through a bidding process.
Lofter Group's new Mong Kok project, Elize Park, was initially launched with a price list. The first price list featured 30 units, offering a discounted average price per square foot of HK$26,688. The units' saleable areas ranged from 243 to 341 square feet, with discounted prices starting from approximately HK$5.99 million to about HK$9.51 million.
When compared to other new developments in the same district, such as One Soho and Larchwood, the first batch of units at Elize Park was priced 23% to 27% higher. This strategy positioned Elize Park as a high-priced launch, contrary to market trends at the time. In response to market conditions, the group later adjusted its sales strategy and announced that the 30 units, which were previously on a price list, would instead be sold through a bidding process.
Carol Chow, the founder and chairperson of the group, said that Elize Park stands out among new developments due to its shorter presale period and limited offering of only 52 units total, making it a rare project. She believes that the bidding process offers more flexibility and better aligns with the market and buyers' needs.
In the past, when new properties were launched for sale by bidding, price lists and other information were not pre-announced. Needless to say, the sales arrangements for Elize Park are indeed uncommon. Is this type of change in compliance with regulations? Additionally, what benefits does bidding offer to both developers and buyers?
To address the first question, such a sales arrangement is in compliance with the Residential Properties (First-hand Sales) Ordinance. The Ordinance does not restrict the sale of residential properties listed on a price list through bidding and allows sellers the flexibility to adjust their business strategies.
This change in strategy by the developer is permissible, and the previously announced unit pricing serves as a market reference. However, it deviates from the guidelines of the Real Estate Developers Association of Hong Kong (REDA), which require that, with the exception of independent houses, mansions, and special units, only properties measuring above 70 square meters (753 square feet) for three-bedroom types or units above 1,076 square feet may be sold by bidding.
The benefits of bidding include, for developers, the potential to secure the highest bid and retain the option not to sell if the desired price is not met, potentially maximizing profits. Developers also maintain control over the timing of the sale.
For buyers, bidding can be time-efficient, eliminating the need to queue for registration or unit selection. It also allows buyers to focus on units they are genuinely interested in, reducing the likelihood of impulsive decisions and subsequent buyer's remorse.
Bidders interested in Elize Park should note that each property has a reserve price, as indicated in the bidding documents. These reserve prices span from about HK$5.9 million to $9.5 million, and bids must not fall below the applicable reserve price. The bidding period is set from February 6, 2024, to March 5, 2024.
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