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"Accident flats" are once again being sold at steep discounts in the Hong Kong property market. A two-bedroom unit with a saleable area of 560 square feet in Shun Chi Court, a Home Ownership Scheme estate in Kwun Tong, was recently put up for auction at HK$2.5 million (after land premium payment). The price per square foot is as low as HK$4,464, which is similar to the price of public housing, sparking heated discussions in the market.
The suicide of a relative triggered the renovation of the property, which resulted in a loss of 790,000 yuan after 12 years of holding.
It is reported that the owner purchased the unit for 3.29 million in 2013, but in 2023, a tragedy occurred in which a relative committed suicide in the house. In order to eliminate the shadow of the accident, the owner spent 200,000 to 300,000 yuan on a comprehensive renovation and is now selling the house at a loss price that is 790,000 yuan (24%) lower than the purchase price. Based on the estimated market value of approximately HK$4.12 million in the same area, the opening price was significantly discounted by HK$1.62 million (40%), which means that the price per square foot is more than 50% lower than the market price.
The net rental return rate of newly renovated investors is the highest at 6.7%
The unit is located on the lower floor of Block C, Shun Fai House, Shun Chi Court. It has two bedrooms and is newly renovated. Loyalty Auction pointed out that the current monthly rent for similar units is about 12,000 to 14,000 yuan. Based on the opening price of 2.5 million yuan, the rental return rate can reach 5.7% to 6.7%, which is significantly higher than the return rate of 3% to 4% for general residential properties, and is expected to attract the attention of long-term investors.
The haunted house market is becoming more rational, and professional handling is the key
In recent years, the Hong Kong market's acceptance of accident flats has gradually increased, and some buyers are willing to take them over at prices below the market price of 30% to 50%. Industry insiders analyzed that the owner of this case chose to disclose the background of the accident and invest in renovation costs, which will help dilute the negative label of the unit. Coupled with the financial incentive of high rental returns, it is expected to accelerate the transaction.
Market data shows that Shun Chi Court has recorded two transactions this year, with actual prices ranging from HK$8,500 to HK$9,300 per square foot. The price per square foot for this auction is only half of the normal price. The auction will be open to public bidding on the 28th of this month, and the result has attracted much attention from the industry.
(Note: The holding period in this article is 12 years according to the original report, but the actual holding period from 2013 to 2024 is 11 years. Please note this.)
Shun Chi CourtShun Chi Court is the first Home Ownership Scheme (HOS) estate in Hong Kong. It is located at 1-10 Shun Chi Street, Si Shun, Kwun Tong, Kowloon, Hong Kong, close to Fei Ngo Shan, the highest mountain in Kowloon. It was designed by Mr. Wakefield, chief architect of the Housing Department, and constructed by Amway (Xiao) Construction. It was completed and occupied in phases from 1979 to 1980. It is the first Home Ownership Scheme (HOS) estate in Hong Kong and the only one with top-floor duplex units to date. An Owners Corporation has been established.
Unlike ordinary housing estates, all units in Shun Chi Court do not need to pay land premium and can be freely transferred in the open market, just like ordinary private housing estates.
Housing estate information
Year of completion: December 31, 1979 - June 12, 1980
Building type: Non-standard
Number of buildings: 6
Total units: 1,539
Unit floor area: 49 to 77 m2 (530 to 830 sq ft)
Unit saleable area: 41 to 65 m2 (440 to 700 sq ft)
Initial launch price ($): 80,900 – 158,100
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