News analysis: Overwhelming response to Silicon Hill launch
- Sold 172 units for c.HK$1.4bn
- Additional batch of units released onto the market to tap the strong demand
- Maintain BUY with HK$118.2 TP
Sun Hung Kai Properties (SHKP) sold 172 units at Silicon Hill Ph 1 in Tai Po, generating sales revenue of c.HK$1.4bn. ASP reached c.HK$17,500psf. The encouraging sales response came as no surprise in view of its relatively attractive pricing. Transportation accessibility should also improve with the construction of the proposed Pak Shek Kok MTR Station nearby.
Silicon Hill will provide a total of 1,871 residential units with GFA of 0.9msf upon scheduled completion from 2H2023 in phases. Ph 1 comprises five residential blocks with 576 units.
On the heels of the strong response, the company released an additional batch of 153 units onto the market at an ASP of HK$17,661psf. SHKP acquired the site where Silicon Hill is being built through a government tender for HK$6.31bn in Feb-19. Adding construction and financing costs, we estimate total development costs at HK$13,500psf. A complete sale of the entire development should yield pre-tax earnings of >HK$3.2bn to SHKP.