As "Insight Vision" enters the fourth quarter of 2026, Hong Kong's residential market is undergoing a critical turning point. The price list announcement of Yuexiu's (00123) new Yau Tong project "Ocean Grand I" has become a key indicator for observing the market trend this quarter. The first batch launched 128 units with an average discounted saleable area price of HK$13,988 per square foot. The starting price for a one-bedroom unit is HK$3,759,400, marking the lowest average discounted price per square foot for a new project in urban Kowloon in nearly ten years. This pricing not only represents a drop of about 7% compared to CK Asset (01113)'s "Seaview" in the same district three years ago, which had an initial average price close to HK$15,000 per square foot (dubbed the "deep-water bomb price"), but also further declines from Sino Land's (00083) "Park Horizon" at HK$14,588 per square foot at the end of last year. The price is significantly lower than the mainstream transaction prices per square foot of secondary housing estates in Yau Tong, Kwun Tong, and even Kai Tak areas. Developers choosing to attract buyers with low pricing reflect that the primary market has officially entered the "price-for-volume" competition phase in the fourth quarter. This price war will have profound impacts on the primary and secondary markets, buyer financial risks, and the overall supply landscape of East Kowloon's property market.
In traditional property cycles, new primary developments usually command a premium over secondary properties in the same area, representing advantages in quality, facilities, and building age. However, "Ocean Grand I"'s pricing reverses this pattern, with primary prices now lower than secondary ones, signaling further pressure on market price defenses. The core reason behind this is that developers lack confidence in future sales velocity and thus prioritize releasing pricing room to attract first-time buyers and achieve faster cash realization, rather than stubbornly holding prices to maximize profits. In the coming period, more new developments are expected to open at progressively lower prices. This strategy will directly squeeze the secondary market, becoming the most significant change in the fourth quarter's property market. This mechanism creates a downward cycle: primary developments continuously cut prices to attract buyers, causing secondary market transactions to freeze and valuations to fall; other developers, in turn, further lower their new launch prices to remain competitive, leading property asset prices to keep searching for a bottom. Liquidity in the secondary market will continue to be under pressure in the fourth quarter. Even owners without urgent need to sell will have to face the reality of continuously adjusting property valuations within their neighborhoods.
Construction period and interest rate environment are another major variable buyers must carefully assess in the fourth quarter. "Ocean Grand I" has a scheduled critical date extending up to 28 months, making it a relatively long construction period project. Buyers choosing the construction-period payment plan will not need to complete transactions or apply for mortgages until nearly two and a half years later. With global inflation still resilient and geopolitical risks persisting, market expectations for Federal Reserve rate cuts have clearly cooled, and there is even renewed possibility of sustained high interest rates or further rate hikes. Hong Kong banks' mortgage rates will follow the trend of U.S. dollar interest rates. For buyers opting for long construction period projects, this means they must bear two layers of interest rate risk. The first layer is that mortgage rates may rise further over the next two and a half years, meaning monthly repayment burdens upon completion could be significantly higher than current estimates. The second layer is property valuation risk: if property prices continue to fall over time, banks may conduct property valuations upon completion, and the assessed value could be lower than the buyer's original contract price. Once the valuation is insufficient, buyers may need to raise additional funds to cover the down payment shortfall, and if they cannot raise sufficient funds, they may even face the risk of contract cancellation. In other words, although a long construction period appears to extend payment timelines and lower initial barriers, it actually transfers the risks of rising interest rates and falling property prices onto buyers, making future borrowing costs and asset depreciation risks non-negligible.
The massive inventory pressure in East Kowloon is the underlying factor driving this price war and indicates that developers in this area have already lost the traditional premium pricing power for urban new launches. East Kowloon covers multiple districts including Yau Tong, Cha Kwo Ling, Kwun Tong, and Kai Tak. Over the next few years, a large number of pre-approved off-plan and ready-to-sell units will gradually enter the market, accumulating substantial unsold inventory. Abundant supply gives buyers extensive choices, eliminating the need to pay a premium for new developments. Yau Tong itself is transitioning from a traditional industrial zone into a waterfront residential area, and the upgrade of regional facilities, community infrastructure, and transportation capacity still requires time to absorb the large influx of new residents. With a large number of units entering the market simultaneously, future rental supply will also increase, keeping rental yields under continuous pressure and making it difficult to attract a large number of long-term investors. The support for East Kowloon's property market mainly relies on self-occupied rigid demand, and a price floor supported solely by first-time buyers is relatively fragile. As the fourth quarter begins, competition among developers in East Kowloon will intensify, with pricing continuing to lean conservative. Subsequent new launches are highly likely to follow this low-price strategy.
Overall, the pricing of "Ocean Grand I" has unveiled a new chapter in Hong Kong's property market for the fourth quarter. The core contradiction of this quarter's market is no longer merely the emotional impact of rate hike expectations, but rather the structural pressure brought by developers' "price-for-volume" strategy. Low-priced primary launches continue to erode the secondary market; long construction period products hide dual risks of interest rates and valuation; massive supply in East Kowloon causes developers to lose pricing control. For self-occupied buyers, low-priced new launches undoubtedly offer home-purchasing opportunities, but potential risks must be carefully weighed; for secondary market owners, stronger price competition should be expected when selling in the fourth quarter. Under massive supply, expectations for rental income and capital appreciation need to be lowered. Looking ahead to the fourth quarter, Hong Kong's property market will enter an inventory digestion phase, with price competition becoming the market norm. Individual low-priced new launches may record decent subscription responses, but this does not mean the overall property market has bottomed out. Cheng Sing Securities Joint Director and Responsible Person, Cheung Chi Wai
*Articles published in "Economic Times" under named and/or unnamed authors represent personal opinions and do not reflect the position of "Economic Times". "Economic Times" serves as a platform for free expression of views.
In traditional property cycles, new primary developments usually command a premium over secondary properties in the same area, representing advantages in quality, facilities, and building age. However, "Ocean Grand I"'s pricing reverses this pattern, with primary prices now lower than secondary ones, signaling further pressure on market price defenses. The core reason behind this is that developers lack confidence in future sales velocity and thus prioritize releasing pricing room to attract first-time buyers and achieve faster cash realization, rather than stubbornly holding prices to maximize profits. In the coming period, more new developments are expected to open at progressively lower prices. This strategy will directly squeeze the secondary market, becoming the most significant change in the fourth quarter's property market. This mechanism creates a downward cycle: primary developments continuously cut prices to attract buyers, causing secondary market transactions to freeze and valuations to fall; other developers, in turn, further lower their new launch prices to remain competitive, leading property asset prices to keep searching for a bottom. Liquidity in the secondary market will continue to be under pressure in the fourth quarter. Even owners without urgent need to sell will have to face the reality of continuously adjusting property valuations within their neighborhoods.
Construction period and interest rate environment are another major variable buyers must carefully assess in the fourth quarter. "Ocean Grand I" has a scheduled critical date extending up to 28 months, making it a relatively long construction period project. Buyers choosing the construction-period payment plan will not need to complete transactions or apply for mortgages until nearly two and a half years later. With global inflation still resilient and geopolitical risks persisting, market expectations for Federal Reserve rate cuts have clearly cooled, and there is even renewed possibility of sustained high interest rates or further rate hikes. Hong Kong banks' mortgage rates will follow the trend of U.S. dollar interest rates. For buyers opting for long construction period projects, this means they must bear two layers of interest rate risk. The first layer is that mortgage rates may rise further over the next two and a half years, meaning monthly repayment burdens upon completion could be significantly higher than current estimates. The second layer is property valuation risk: if property prices continue to fall over time, banks may conduct property valuations upon completion, and the assessed value could be lower than the buyer's original contract price. Once the valuation is insufficient, buyers may need to raise additional funds to cover the down payment shortfall, and if they cannot raise sufficient funds, they may even face the risk of contract cancellation. In other words, although a long construction period appears to extend payment timelines and lower initial barriers, it actually transfers the risks of rising interest rates and falling property prices onto buyers, making future borrowing costs and asset depreciation risks non-negligible.
The massive inventory pressure in East Kowloon is the underlying factor driving this price war and indicates that developers in this area have already lost the traditional premium pricing power for urban new launches. East Kowloon covers multiple districts including Yau Tong, Cha Kwo Ling, Kwun Tong, and Kai Tak. Over the next few years, a large number of pre-approved off-plan and ready-to-sell units will gradually enter the market, accumulating substantial unsold inventory. Abundant supply gives buyers extensive choices, eliminating the need to pay a premium for new developments. Yau Tong itself is transitioning from a traditional industrial zone into a waterfront residential area, and the upgrade of regional facilities, community infrastructure, and transportation capacity still requires time to absorb the large influx of new residents. With a large number of units entering the market simultaneously, future rental supply will also increase, keeping rental yields under continuous pressure and making it difficult to attract a large number of long-term investors. The support for East Kowloon's property market mainly relies on self-occupied rigid demand, and a price floor supported solely by first-time buyers is relatively fragile. As the fourth quarter begins, competition among developers in East Kowloon will intensify, with pricing continuing to lean conservative. Subsequent new launches are highly likely to follow this low-price strategy.
Overall, the pricing of "Ocean Grand I" has unveiled a new chapter in Hong Kong's property market for the fourth quarter. The core contradiction of this quarter's market is no longer merely the emotional impact of rate hike expectations, but rather the structural pressure brought by developers' "price-for-volume" strategy. Low-priced primary launches continue to erode the secondary market; long construction period products hide dual risks of interest rates and valuation; massive supply in East Kowloon causes developers to lose pricing control. For self-occupied buyers, low-priced new launches undoubtedly offer home-purchasing opportunities, but potential risks must be carefully weighed; for secondary market owners, stronger price competition should be expected when selling in the fourth quarter. Under massive supply, expectations for rental income and capital appreciation need to be lowered. Looking ahead to the fourth quarter, Hong Kong's property market will enter an inventory digestion phase, with price competition becoming the market norm. Individual low-priced new launches may record decent subscription responses, but this does not mean the overall property market has bottomed out. Cheng Sing Securities Joint Director and Responsible Person, Cheung Chi Wai
*Articles published in "Economic Times" under named and/or unnamed authors represent personal opinions and do not reflect the position of "Economic Times". "Economic Times" serves as a platform for free expression of views.
