Sold out project marks turnaround for Hong Kong’s developers

[HONG KONG] It looked like a challenge even for Hong Kong’s biggest property developer: selling thousands of homes in a new town next to a remote country park at a time when the market was struggling to recover.But batch after batch of homes at Sun Hung Kai Properties’ Sierra Sea project have sold out within hours in recent weeks. That has generated more than HK$9 billion (S$1.5 billion) of revenue for the developer, which sold more than 1,400 homes over the past month.“Buyers have been enthusiastic,” said Ivan Li, a property agent with Midland Property in the Ma On Shan area where the Sierra Sea is located. “They find the pricing attractive so there’s been a lot of appetite.” The bumper sales are the latest sign of a revival in Hong Kong’s residential property market, giving relief to developers that had suffered from years of weak stock prices and declining rental income from commercial real estate.Most residential projects launched in the three months through January saw more than 80 per cent of units sold, according to analysts at Morgan Stanley. That has allowed developers to raise prices for the latest batches, though the hikes are still mild at less than 10 per cent, the bank said.“We are seeing strong primary sales in Hong Kong, and our thesis of a bullish residential market is ongoing,” said Praveen Choudhary, head of Hong Kong and India property research at Morgan Stanley. He expects prices to rise 10 per cent in 2026 on population inflows from mainland China and the wealth effect from a rebounding stock market.A drop in the supply of homes is also likely to support prices. The estimated time required to absorb the total potential supply has halved from 102 months in late 2023 to 51 months in September 2025, Hong Kong Legislative Council research shows.To be sure, the recovery in the residential market remains modest. Pricing of new homes in the city is still much lower than during the peak of the market a few years ago. A recent group of Sierra Sea homes was priced at about HK$11,000 per square foot on average. In comparison, a residential project five minutes’ drive away cost more than HK$16,000 per square foot when sales began in 2018.In the second-hand market, gains in values have been moderate. Prices of used homes grew 6 per cent in the past year but are still about a quarter lower than in 2021, data from Centaline Property Agency show.A years-long downturn across residential and commercial sectors has hurt the city’s property firms. Shares of Hong Kong real estate companies lost more than 50 per cent from April 2019 to April 2025, when they began to stage a recovery, according to a Bloomberg Intelligence index. Developers’ commercial real estate woes are likely to continue, with office vacancies hovering at the highest level on record and more supply coming in the next couple of years. That means the industry will have to count on home sales for now.“We think the market will be active in the next few months at least,” said Li, the Midland agent. BLOOMBERG