A good article about Park Island

I got this article below from a property magazine in HK called Square Foot. It was published in 2008. I have made some additions of my own (in bold italics).

Background

In the early days, most Park Island purchasers were investors looking to make a quick profit, but today 90 percent are buying for their own use. The property market is still behind that of other parts of Hong Kong but it is moving up slowly. My observation is that this is as correct in 2010 as it was in 2008.

  

By way of an introduction, for those not familiar with it, Park Island Estate on Ma Wan is best described as Discovery Bay's baby brother. It has also been described as "Like DB but more Chinese" and "Like DB but classier and cleaner". Brought into being by Sun Hung Kai Properties Ltd in 2002, it covers over 1.3 million square feet, and is now into its 31st phase.The final phase of apartments is due to be launched in Q1 or Q2 of 2011. After that, no further supply of apartments will be available, although some further facilities might still be built on Park Island. There are presently rumors of a botique hotel being built on Ma Wan Island, and also rumors of a car park for a limited rumber of residents to buy/rent being built

What's on offer is a child- and dog-friendly resort lifestyle, just 25 minutes ferry ride from the hustle and bustle of Central. I took a ferry there recently and it was just 22 minutes :) There's a fancy promenade, around 85,000 square feet of retail space, containing shops and restaurants, and a real community feel.

So where is it exactly? Ma Wan is an outlying island, part of the Tseun Wan district, nestled between Lamma Island and Tsing Yi Island. Inhabitation was formerly limited to a small fishing village (Tin Liu), but plans for a private housing estate came into being in the mid-1990s with the construction of the Lantau Link, connecting Ma Wan to Tsing Yi by the Tsing Ma Bridge and to Lantau Island by the Kap Shui Mun Bridge.

Before the development of the Lantau Link, which was built primarily to connect Hong Kong International Airport to the Central Business District, Tin Liu was accessible only by sampan or ferry.

Access to Park Island is now a breeze by ferry or bus, though no cars, taxis or hire cars are allowed within the development. These restrictions are being gradually relaxed. For example taxis are allowed now and licences for private cars can also be obtained in certain circumstances. Park Island Transport Co., Ltd operates bus services between Park Island and Tsing Yi MTR Station, Kwai Fong, Hong Kong International Airport and Tsuen Wan. It also provides ferry services to Central and Tsuen Wan West (right next to the KCR station).

Steady demand since 2002

While Park Island appeals to all those seeking a quiet life (boosted by full clubhouse facilities), interest is particularly high amongst airport workers who need to factor in a commute to Lantau Island. Aside from Discovery Bay, supply of resort-style residential development is limited around the airport area, and the 25-minute (HK$18) airport shuttle service from Park Island secures a steady supply of both tenants and homebuyers. It is very obvious that many pilots live on Park Island with their families. They usually occupy the larger apartments. The airhostesses occupy the smaller apartments, sometimes sharing a 2 bedroom apartment between two hostesses. Park Island also seems very popular among ex-pats coming to Hong Kong with dogs, and people who want to work in Hong Kong but want cleaner air, and a quieter environment, or access to a beach for morning swims.

From the outset, interest in Park Island was high. At the initial presale, buyers happily paid a deposit of HK$50,000 without receiving a sales brochure or even a price list in advance. Ongoing construction was not overly affected by Sars and buyers who showed confidence in the development (and the market in general) back in 2003, have subsequently cashed in. I would say prices dropped significantly during SARS. SARS was devistating for all of Hong Kong and affected property prices and business across the city.

For Sun Hung Kai, meanwhile, the project continues to be a goldmine. In the fiscal year to June 2007, the developer's profit from property sales rose to HK$7.7 billion from HK$7.05 billion a year earlier. Property-sales profit came mainly from the sale of residential projects, including Park Island Phase 5 (Ma Wan), Severn 8 (The Peak), Harbour Green and Manhattan Hill (West Kowloon), and The Vineyard (Yuen Long). There will always be a high demand for quality developments with great facilities in Hong Kong. The "Park Island" model makes this very clear.

In the early days, most Park Island purchasers were investors looking to make a quick profit, but today 90 percent are buying for their own use. The property market is still behind that of other parts of Hong Kong but it is moving up slowly. This seems true, but I have often wondered why this is. I really believe that Park Island will over time appreciate well above the normal rate of valuation growth in Hong Kong. Its such a great development, and scarcity/exclusivity, combined with demand from renters and owners will surely result in higher prices over time.

Price point still attractive

The average selling price for Park Island properties is around HK$4,300 per square foot. For a 650-square-foot, two-room unit with clubhouse facilities and a sea view, you are looking at paying around HK$2.8 million - a price directly comparable to that of Discovery Bay. I would say average selling price now for a typical apartment in end of 2010 is between 4300 per square foot to 5600 per square foot, depending on view, floor level etc. Also for the so called "special apartments" (ie those with rooftops, or larger balconies) the price is around 10,000 per square foot.

It's interesting to note that you would pay more than double this (at least HK$9,000 per square foot) for an old apartment without facilities or a sea view in Shouson Hill.

Unit size varies widely between the various Park Island phases though, with the exception of a limited number of 2,000-square-ft "Crystal Units", (Agents typically call these "special apartments" in English, but I think the developer originally used the term "Crystal Units") few measure over 1,000 square feet. The flats make ideal starter homes for young families and 75 percent of residents are local Chinese, as opposed to only 25 percent in Discovery Bay.

With rents currently going through the roof on Hong Kong Island, and air quality becoming a major concern, an increasing number of tenants are looking to the outlying islands, where they can find affordable homes with facilities. Park Island prices are appealing and directly comparable to those in Discovery Bay and at the Gold Coast Residences in Castle Peak Bay. A 650-square-foot unit rents for around HK$8,000 per month, or HK$12 per square foot. Quite a steal when you consider that the rent on a Shouson Hill apartment averages out at HK$33 per square foot. I would say a a 650-square-foot unit now rents for around HK$11,000-14,000 per month which is still pretty good value.

Despite the steady demand for Park Island property, both rental and sales prices remain relatively stable, due to the steady supply of new high-rise flats. The majority of apartments measure between 620 square feet and 750 square feet, and 75 percent have a balcony. This has now changed. Apart from one final luxury phase of villas there will be no more supply for Park Island. Apartments here seem already in short supply, which is leading to the increases in rent and prices that are now occurring.

Park Island's appeal isn't limited to its price point however. Concern for the environment is a fundamental part of the development, and Sun Hung Kai won a Gold Award (Private Housing) in the 2006 Hong Kong Eco-Business Awards.

The 24-hour battery powered shuttle buses keep exhaust emissions to a minimum and energy-saving lights in common areas reduce power consumption by approximately 20 percent. I also noticed a range of other eco-friendly features. Eg esculators that are motion-sensitive and only run when they sense a person is coming. Having said that, I did notice that some of the lobbys of the buildings have the main doors open with the aircon on - that is clearly not eco-friendly! Added to this of course, there's the 2 million square-feet Ma Wan theme park (opened in 2003) which is devoted to the environment, childhood development and healthy living.

We believe Park Island property is an outstanding living location in Hong Kong that will continue to grow in popularity and desirability among higher income earners, ex-pats, and local citizens looking for value for money once the development is complete.





Photo of Park Island Apartments