Hong Kong’s primary luxury residential volume to be extremely low this year
The market is likely to be dominated by distress sales.
According to a Savills report, Hong Kong’s luxury residential volume swiftly rebounded in the mid-price bracket. HK$50m to HK$100m and HK$100m to HK$200m transaction volumes were up 85% and 240% respectively over the quarter, denoting reviving interests among local and Mainland buyers after border reopening.
Here’s more from Savills:
The Government launched a series of measures in late 2022 including the Top Talent Pass Scheme trawling for talents. In the first two months of launching, the scheme saw 1200 high income talents (>HK$2.5 million annual income) approved to reside in Hong Kong, 422 of which earned HK$5 million per annum or more and could be potential luxury residential buyers.
On the luxury front, developers held firm on asking prices for their luxury projects and as such, over 130 houses and 760 luxury apartments are currently completed and unsold on Hong Kong Island. With developers unlikely to move on pricing easily in the near future, primary luxury volume is expected to remain extremely low in 2023, with the market likely to be dominated by distress sales, where pricing can be 20% to 40% below market values.
Nevertheless, some significant transactions were recorded in the super luxury segment in Q1, most with average unit prices above HK$100,000, and a majority of which being redevelopment sites on the Peak and Southside. For instance, a newly completed house at 45 Baker Road at the Peak was transacted at HK$1.2 billion, marking a new Asia record with an average unit price on permitted GFA of HK$285,239.