Everything about Landscope Christie's International Real Estate and the Hong Kong luxury property market

Buying Power

Last month, in the wake of a high auction price achieved for a residential site in Homantin, the luxury sales market responded swiftly with increased transactions as buyers’ confidence returned. Just shortly before, the market had sagged due to uncertainties posed by local government’s clamp down on property speculations and Beijing’s dampening of investment demand on the mainland.

Sizeable transactions of over HK$80 million were recorded on Hong Kong Island for mostly townhouses in the southern regions. Large apartments also have strong followers. While many buyers are coming out with improved bids, it has been found that the sellers are even more aggressive in raising the offers. Among the buying force, a significant part still comprises the mainlanders, but there is a growing trend that many local investors are joining the shopping foray. Since the economic recovery of Hong Kong in 2003, the upper echelon of the local wealthy population has benefited the most from asset value growth, and has amassed more returns in the stock market and property market. With interest rates hovering in historical lows it is predicted that we will not see any signs of increase anytime soon. Earned profits have been ploughed back into the property market, in particular luxury property markets that have always “enjoyed” an undersupply condition. The influx of more expatriates, due to a new round of hiring among multinational corporations, has led to a sustained rental growth in the high end market since last year – making property investments more rewarding as owners can reap better yields while riding on a wave of capital appreciation.

It is expected that the wave of property investment will continue for as long as the economy keeps growing and interest rates remain low (a 200-basis points increase is still considered low). This is because the undersupply situation will not improve in the foreseeable future and rental escalations will keep its course in the wake of global re-focusing in China and Hong Kong.

By Koh Keng-shing