Hong Kong’s biggest property developer Sun Hung Kai Properties Ltd sold out the first batch of homes for a new project within hours, as the lowest mortgage rates in more than two years lured buyers.

Sun Hung Kai sold all 160 units in the 1B phase of Sierra Sea, a residential development in the Ma On Shan area, according to Centaline Property Agency.

A drop in interest rates is helping the city’s residential sales, which saw an unprecedented downturn in the past few years. The one-month Hong Kong Interbank Offered Rate is hovering at 1.3 percent, the lowest since August 2022. 

Sun Hung Kai may beat its HK$25 billion ($3.2 billion) Hong Kong contracted sales target by 50 percent in the fiscal year ending in June, as mortgage rates drop for new-home buyers, Bloomberg Intelligence said in a note this week.

ALSO READ: LegCo passes stamp duty bill to ease burden on HK low-end home buyers

The city’s effective mortgage rate linked to Hibor has dropped to 2.87 percent, the lowest in more than two years, according to mReferral Mortgage Brokerage Services.

Falling interest rates are positive for property companies, JPMorgan Chase & Co. analysts including Karl Chan wrote in a note on May 7. They estimate an average 5 percent earnings boost for every 100 basis point annualized decrease in financing costs from floating debt for the developers.

Meanwhile, the chances of Hong Kong’s residential property market bottoming out are growing on the back of cheaper interest rates, according to Jefferies Financial Group Inc. Hong Kong home prices are 29 percent below their peak in 2021, data from the government show. The number of households with negative equity — when the value of a property is less than the outstanding mortgage loan — rose to the highest since 2003 as of the end of March.