- Borrowers must already own another property to qualify
- Home prices have fallen 13% from September as economy slows
Sun Hung Kai Properties Ltd., Hong Kong’s largest developer by market value, is offering mortgages worth as much as 120 percent of a home’s value at one of its projects as sales have slumped in the city.
There is a catch: to qualify, buyers at Park Yoho Venezia in the city’s Yuen Long district must already own another property pledged as security, according to the sales information on the development’s website. A spokesman for Sun Hung Kai confirmed the offer, which was earlier reported by the South China Morning Post newspaper.
Sun Hung Kai’s financing scheme is aimed at attracting buyers in a market that has seen a correction of more than 13 percent since prices peaked in September. It’s also a way to circumvent government cooling measures that restrict traditional bank mortgages on properties costing less than HK$10 million to 60 percent of their value.
"Overall property developers are very aggressive and trying to offload inventory because the outlook of the Hong Kong property market is not looking good," Raymond Yeung, a senior economist at Australia & New Zealand Banking Group Ltd., said by phone.
Though it is not alone, Sun Hung Kai’s initiative is so far among the most generous offers from developers to entice buyers. Henderson Land Development Co., Kowloon Development Co. and Cheung Kong Property Holdings Ltd. started offering financing of up to 90 percent last year as prices started to decline.
Shares of Sun Hung Kai fell 2 percent to HK$87.75, the lowest since May 26, as of 1:07 p.m. Hong Kong time. Developers had the second-biggest drop as a group on the benchmark Hang Seng Index, with all 10 constituents in the property gauge down. The Hang Seng Property Index declined 2.2 percent, the lowest in almost three weeks.