Cheung Kong unveils 2nd mortgage for One West Kowloon

Ceiling will be 20% of the price.

According to Maybank Kim Eng, CKH announced that it will offer 2nd mortgage of maximum 20% of the property price, at maximum tenor of 20 years priced at Prime Rate of 5.25% p.a, to its latest One West Kowloon project.

Here's more from Maybank Kim Eng:

The project could be launched on next Tuesday at the earliest. The management stressed earlier in the month that the ASP will take reference to adjacent secondary estates (‘Four Little Dragons in West Kowloon’ are transacting at HKD8.5-9.0k psf).

Separately, HKP (16) expects its Yuen Long project, Residence 88 (352 units with 55% are 2-bedroom) to receive presale consent at end Dec, 2012 and will be launched for sale right after granting of the consent.

Based on the average unit size of 903 sq ft and target ASP of HKD9.6k (10% premium to adjacent secondary estates), buyers could reduce its down-payment from HKD3.7m (property price of HKD8.7m, max LTV of 60% but capped at HKD5m) to HKD2m (second mortgage of 20% of property price i.e. HKD1.7m).

We estimated that the effective price discount at 2-3% of the property price from second mortgage, on top of the maximum 5% off when buyers choose normal payment terms (45-60 days completion).

We believe that larger-scale developers will have edge over smaller counterparts amid the current quiet market, 1 month after the extension of Special Stamp Duty/Introduction of Buyer’s Stamp Duty at end-October.

Instead of launching sizeable development projects originally scheduled in 4Q12 (such as CKH’s City Point in Tsuen Wan and SHKP’s The Wings II and Riva in Tseung Kwan O and Yuen Long, respectively), the big players are still flexible in smaller projects launches, as demonstrated by One West Kowloon and Residence 88.