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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