Everything about Landscope Christie's International Real Estate and the Hong Kong luxury property market
After three months of sales freeze, the luxury property market seemed to have thawed in last December. Sales resumed in Southside and The Peak notably, with a number of townhouses sold for between $35 million to $60 million, many of them having been on the market for over 9 months, some even more than a year. The brisk sale of Belgravia apartments on South Bay Road at 10% premium to market price was a surprise. It helped many townhouse owners in Southside finding buyers who felt townhouses with similar price tag were really attractive. On The Peak, the market benefited from an improved sentiment and had seen the sale of Sunshine Villa, La Hacienda and Kelletteria. With price having tumbled by 30% to 40% over the last 12 months, bargain hunters are out in force. The sales have defied market predictions, amidst a gloomy economic outlook.
The rental market however has not enjoyed a similar fortune. Rents keep sliding in the wake of diminished demand from many sectors, notably the financial sector. The rate of rental decline has no sign of abatement, as more tenants are leaving Hong Kong and more properties are becoming vacant. The most severely impacted are the pinnacle properties, those large houses on The Peak and in the Southside, whose sizes are usually beyond 5,000 square feet. These houses were renting for north of $400,000 per month 12 months ago but are now finding it extremely difficult to attract a tenant with a $200,000 price tag. As economy continues it downsizing, the luxury property rental market will not see bottoming out any time soon. The resultant low yield will damp any hope of a sale price growth despite a higher sales level. The rental market could be even worse after Chinese New Year, when the market enters its traditional low season.