HK houses going for HK$300m
Published March 17, 2008
HK houses going for HK$300m
Supply squeeze on luxury homes seen driving up prices by 25% this year
By JANE MOIR
IN HONG KONG
HOUSES at The Peak are fetching close to HK$300 million (S$53 million), and are still rising. This epitomises Hong Kong's very hot luxury property market, which is facing a tight supply squeeze. As a result, prices for top-tier homes are expected to skyrocket by 25 per cent this year alone.
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Grand view: Fewer than 200 homes are expected to become available in ultra-high-end residential areas such as The Peak and the South Side. Mainland Chinese are among top buyers of super-luxurious homes
In what is likely the most supply-challenged year since 1997, fewer than 200 units are expected to become available in ultra-high-end residential areas such as The Peak and the South Side, where prices for standalone houses are going for nearly HK$300 million.
In the last quarter of 2007 alone, luxury residential prices at The Peak rose by 11.8 per cent, according to data from property group Colliers International (Hong Kong).
The property firm anticipates growth of 25 per cent in the luxury sector this year. Moreover, supply is unlikely to become better next year and in 2010, it notes.
According to Ricky Poon, executive director of sales at Colliers in Hong Kong, prices at the top end of the market are already outstripping those seen during the previous property market highs of 1997.
'In the super-luxury home area (where properties fetch HK$100 million and above), the prices are transcending the overall luxury market price,' he noted. This would include houses that are in scarce supply in areas such as The Peak - in October, for example, one house there sold for HK$296 million.
'There is limited land supply . . . all the developers are hungry for the prestigious locations,' Mr Poon added.
Some developers have tried to trigger land sales by putting in applications for plots with the government, but the requests have been rejected.
'The government has a high expectation for these types of locations,' Mr Poon explained. 'They expect more money for it.'
He said that the situation is unlikely to improve in the next three years, leading to a situation where stock will fall to as much as 59 per cent below historical averages.
On The Peak, for example, Colliers expects just 18 new houses to become available this year. On the South Side, it expects 11 new units to be completed during the year, while the Mid-Levels is likely to see 165 units become available.
The real estate firm estimates that just under 1,000 units in the residential sector will be completed in 2008, the majority being in the Residence Bel Air complex near the Cyberport development.
According to Mr Poon, among the top buyers of the super-luxurious homes are mainland Chinese. 'I would say 50 to 60 per cent are mainland Chinese, and the rest are mainly second-generation wealthy or celebrities, with a few expatriates,' he said.
Hong Kong's property market has seen a significant upswing on the heels of buoyant stock market activity and the Fed's series of interest rate cuts.
And as inflation in the city increases and rents are pushed upwards, people are opting to buy into the residential sector.
In November, the number of sale and purchase agreements for residential units rose to 15,759, the biggest number of transactions in a single month since July 1997.
In the luxury sector, the number of sale transactions exceeding HK$10 million saw growth of 40 per cent between September and November compared with the year-ago period.
