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Thread: High-end property boom in Hong Kong

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    Default High-end property boom in Hong Kong

    March 23, 2007

    High-end property boom in Hong Kong

    Penthouse with private pool sells for record apartment price of $6,200 psf

    By Vince Chong, Hong Kong Correspondent


    LUXURY homes in Hong Kong are getting more expensive, with the sale of a penthouse earlier this week setting a record apartment price of HK$32,000 (S$6,200) per square foot (psf).

    This broke the previous high of HK$27,407 per sq ft set in 1997 - right before the Asian financial crisis.

    The highest-ever selling price for a home in Hong Kong was set earlier this month when one house in the high-end Peak district fetched HK$38,500 per sq ft.

    Last year, another house on the Peak sold at over HK$35,000 per sq ft.

    Analysts say rich mainlanders as well as people who have made huge profits in the financial markets are fuelling the demand for a limited supply of top-end luxury homes here.

    'Penthouses in Hong Kong can cost a premium of as high as 40 per cent to 50 per cent because there are fewer of them,' said Mr Simon Wong, the director of research at property firm CB Richard Ellis.

    'In recent years, homes with full views of Victoria Harbour and with posh clubhouses have also commanded above-average prices.'

    More records look set to be broken with one of Hong Kong's leading developers, Sun Hung Kai Properties, forking out HK$1.8 billion - a record HK$42,196 per sq ft - for a plot of Peak land last December.

    This means that prices of new homes there will have to be set above this mark, possibly as high as HK$60,000 per sq ft, analysts say.

    Sun Hung Kai is also co-developer of the luxury Orchard Turn condominium in Singapore, which this week set the city-state's record home price of S$4,000 per sq ft.

    But analysts have noted that such extreme prices extend only to a limited supply of homes that are located in an exclusive location and that come complete with luxurious frills.

    For Hong Kong, they told The Straits Times, this translates into an address on the Peak, country club-like facilities and top-end designer furnishings.

    The latest record price of HK$32,000 per sq ft was set by an apartment at The Legend at Jardine's Lookout, which was first released in 2005.

    The 3,850-sq-ft penthouse with a private swimming pool cost a hefty HK$123.2 million. It is part of a 376-unit condominium project located near the shopping district of Causeway Bay.

    Incidentally, Causeway Bay also commands retail rents that are among the world's costliest, if not the highest.

    Hong Kong's luxury home sector - units exceeding 100 sq m (1,076 sq ft) - are expected to rise by 10 per cent to 15 per cent on average this year.

    On the other hand, mass-market apartments are forecast to appreciate more slowly in the single-digit range. Slightly over half of Hong Kongers live in private properties.

    This, many believe, also reflects the growing problem of unequal wage distribution, with most of Hong Kong's wealth amassed at the top.

    'The gap between the rich and the rest is widening and, in the mid-to-long run, there is the danger that the average person will be priced out of his dream home,' said City University professor James Sung, who also sits on public advisory boards.

    'This is a hot potato facing the current administration, which could turn into a big social and political problem if not properly addressed.'

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    Default HK's mass residential market seen picking up

    Published March 27, 2007

    HK's mass residential market seen picking up

    Buyers encouraged by govt Budget, mortgage price war, say property agents

    By JANE MOIR
    IN HONG KONG


    A STRING of recent property sales in Hong Kong's mass residential market has triggered speculation of a more brisk outlook for the sector, which continues to lag the luxury sector on a grand scale.



    Sturdy sales: Nearly 500 flats were reportedly sold this weekend alone across Hong Kong


    Despite strong economic growth last year, the mass residential property market dropped 2.7 per cent in 2006. In contrast, the luxury sector has soared by more than 70 per cent since the Sars crisis of 2003.

    Sales of cheaper flats over the past week have grabbed the headlines, with some buyers having to queue for hours to sign up for the latest residential offerings.

    Hong Kong is also experiencing a mortgage price war, but the mass market has been relatively immune up to now.

    Nearly 500 flats were reportedly sold this weekend alone across Hong Kong, including Henderson Land's 119-unit project in Yuen Long, The Verdancy. The flats sold for around HK$2,300 (S$447) per square foot.

    Sun Hung Kai Properties also sold more than 200 of its Manhattan Hill units in Lai Chi Kok at HK$5,500 to HK$6,000 psf. A further 80 units of Pacific Century Premium Developments' Bel Air residential project at Cyberport were sold, just days after being released.

    Property agents said a mixture of the feel-good factor from this year's Budget and a mortgage war in the city had encouraged buyers.

    Despite sturdier sales in recent weeks, some analysts remain cautious, suggesting that developers may be using various tactics to talk up the market as buyers remain wary of high prices being sought in the mass residential sector.

    Andy So, research analyst at Core Pacific Yamaichi, noted, however, that much will depend on the sales tactics employed by developers. 'Is it (the buying surge) simply because of the fact that some developers chose to launch fairly aggressive sales over the weekend?' he said.

    He believes the mass sector will post fairly moderate growth this year of a few percentage points. The primary reason for sluggish growth, he stressed, is the high price being sought. 'Demand at the current price level shouldn't be very strong - the asking price by the developers is too high,' he said.

    Property experts expect an increase of up to 20 per cent in luxury residential sales this year as demand for up-market homes continues to soar amid limited supply, but the mass sector is continuing to lag as buyers steer clear of steep price tags.

    However, property firms such as Savills believe there may be a chance of the mass sector picking up this year if developers price the units slightly lower. Savills also points to the number of sale and purchase agreements for residential units in January, which reached 7,500, a year-on-year increase of 53 per cent.

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