Take a Break

December 17, 2009

The property market has gone into hibernation even before winter began.Isolated sales have been recorded in the luxury property market, but they have failed to generate momentum. Primary and secondary markets both suffered from lack of buying interest, despite irresistible financing packages offered by banks. However, many sellers are standing firm, reluctant to relax on their asking price. A handful of eager sellers have eased on negotiability, resulting in sales.

The record high prices achieved at 39 Conduit Road in October did not help the market in any way. On the contrary, it elevated sellers’ expectations to another stratosphere. Buyers on the other hand were not convinced, and adopted a wait-and-watch attitude. Transactions in traditional upscale locations have dwindled. Property brokers now find themselves spending more time chatting with fellow brokers than talking with clients; a non-productive routine that only kills time and boredom! Prospective buyers have been watching on the sidelines, waiting to seize bargain opportunities without success. But it will not be too long before prices take a dip, since sellers under pressure will be the first to succumb to the prolonged lull and accept lower offers, as the market enters its fourth quiet month. The festive season is always a quiet period for luxury property sales. The Christmas period, followed by Chinese New Year usually results in a period of low activity, as the well-heeled leave the city for a holiday.

Among the few luxury property sales, most notably is The Westminster Terrace developed by Grosvenor Estates in Tsuen Wan, a location better known for its industrial roots and low cost government housing. This new residential building sits on the shoreline of Ting Kau and takes in the iconic view of Tsing Ma Bridge. The 3,000 square feet size of a typical unit qualifies it to be ranked with other luxury properties on Hong Kong Island. It surprised the market by signing up buyers who forked out lump sum payments from $30 million upwards, and the unit price was almost double the going rate of similar properties in the neighbourhood.

At the top end of the luxury market, however, there were still sufficient sales, reflecting a persistently strong demand in this niche market. A house at Island Grove, 40 Island Road recently sold for $238 million ($40,338 per square foot). A sale was concluded on House 25 at Residence Bel-Air for $126 million. Another house at 4 Peel Rise, The Peak changed hands at $170 million. Earlier on, 45 Tai Tam Road, a free-standing single house with a site area of 32,390 square feet, was sold for $480 million, one in a handful of mega transactions in the luxury property market this year.

As the economy continues to recover, and barring any significant negative elements on the horizon, we are of the view that the luxury property market will, perhaps, make a small dent in the first couple of months in 2010 before resuming its uptrend for the rest of the year.

By KS Koh