HONG KONG • Sun Hung Kai Properties, Hong Kong's largest developer by market value, is offering mortgages worth as much as 120 per cent 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 per cent since prices peaked in September.
Hong Kong home prices surged 370 per cent from their 2003 level through the September peak before the correction began, spurred by a rising supply of housing and a slowdown in China.
Sun Hung Kai's scheme is also a way to circumvent government cooling measures that restrict traditional bank mortgages on properties costing less than HK$10 million (S$1.74 million) to 60 per cent 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," Mr Raymond Yeung, a senior economist at Australia & New Zealand Banking Group, said by phone.
Ratings agency S&P has forecast an average home price drop of 10 per cent to 15 per cent in Hong Kong this year, but added that the industry could withstand much worse.
Hong Kong property companies have been less active in purchasing land released by the government for sale this year as they are struggling to sell existing units in their inventories and offering discounts to entice new buyers.
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, Kowloon Development and Cheung Kong Property Holdings started offering financing of up to 90 per cent last year as prices started to decline.
Shares of Sun Hung Kai fell by 2 per cent to HK$87.75, the lowest since May 26 in Hong Kong.
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 by 2.2 per cent, the lowest in almost three weeks.