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Hong Kong's new vacancy tax could land Sun Hung Kai HK$200M in charges

Sun Hung Kai Properties Ltd. may have a tax bill of HK$200 million to pay for empty units at its 355-apartment Victoria Harbour residential development, tracking Hong Kong's recently unveiled vacancy tax, the South China Morning Post reported.

The developer is pricing the 265 luxury units it is holding at the project at a record monthly rent of HK$100 per square foot, after receiving an occupation permit for the development a week ago. The Aug. 9 report cited Belinda Kuan, general manager of Sun Hung Kai's Signature Homes leasing unit, as saying that 140 apartments at Tower Six of the estate would be put on the market for leasing by 2018-end.

The HK$200 million estimate was calculated by Vincent Cheung Kiu-cho, Colliers International deputy managing director for Asia valuation and advisory services, who based it on the HK$100 per-square-foot monthly rental price and apartment size range of between 361 square feet to 1,063 square feet of the 265 units.

The special administrative region introduced the vacancy tax on empty new homes in June to cool famously high housing prices in the city. The vacancy tax would be applicable to all newly built apartments left vacant for six months out of a year, with units considered finished a year after developers receive an occupation permit.

The new tax regulation comes together with another new requirement for developers to sell a minimum of 20% of units at the launch of any development with approved pre-sale consent. The publication quoted Victor Lui Ting, Sun Hung Kai's deputy managing director, as saying that 90 apartments at the development had been sold.

Sun Hung Kai is said to have the largest number of unsold apartments in its inventory, with as many of 2,656 units remaining unoccupied, according to earlier media reports.