March 17, 2008
HK houses going for HK$300m
Supply squeeze on luxury homes seen driving up prices by 25% this year
HOUSES at
The Peak are fetching close to HK$300 million (S$53 million), and are
still rising. This epitomises Hong Kong's very hot luxury property market,
which is facing a tight supply squeeze. As a result, prices for top-tier
homes are expected to skyrocket by 25 per cent this year alone.
Grand view: Fewer than 200 homes are expected to become available in
ultra-high-end residential areas such as The Peak and the South Side.
Mainland Chinese are among top buyers of super-luxurious homes
In what is likely the most supply-challenged year since 1997, fewer
than 200 units are expected to become available in ultra-high-end residential
areas such as The Peak and the South Side, where prices for standalone
houses are going for nearly HK$300 million.
In the last
quarter of 2007 alone, luxury residential prices at The Peak rose by
11.8 per cent, according to data from property group Colliers International
(Hong Kong).
The property
firm anticipates growth of 25 per cent in the luxury sector this year.
Moreover, supply is unlikely to become better next year and in 2010,
it notes.
According
to Ricky Poon, executive director of sales at Colliers in Hong Kong,
prices at the top end of the market are already outstripping those seen
during the previous property market highs of 1997.
'In the
super-luxury home area (where properties fetch HK$100 million and above),
the prices are transcending the overall luxury market price,' he noted.
This would include houses that are in scarce supply in areas such as
The Peak - in October, for example, one house there sold for HK$296
million.
'There is
limited land supply . . . all the developers are hungry for the prestigious
locations,' Mr Poon added.
Some developers
have tried to trigger land sales by putting in applications for plots
with the government, but the requests have been rejected.
'The government
has a high expectation for these types of locations,' Mr Poon explained.
'They expect more money for it.'
He said
that the situation is unlikely to improve in the next three years, leading
to a situation where stock will fall to as much as 59 per cent below
historical averages.
On The Peak,
for example, Colliers expects just 18 new houses to become available
this year. On the South Side, it expects 11 new units to be completed
during the year, while the Mid-Levels is likely to see 165 units become
available.
The real
estate firm estimates that just under 1,000 units in the residential
sector will be completed in 2008, the majority being in the Residence
Bel Air complex near the Cyberport development.
According
to Mr Poon, among the top buyers of the super-luxurious homes are mainland
Chinese. 'I would say 50 to 60 per cent are mainland Chinese, and the
rest are mainly second-generation wealthy or celebrities, with a few
expatriates,' he said.
Hong Kong's
property market has seen a significant upswing on the heels of buoyant
stock market activity and the Fed's series of interest rate cuts.
And as inflation
in the city increases and rents are pushed upwards, people are opting
to buy into the residential sector.
In November,
the number of sale and purchase agreements for residential units rose
to 15,759, the biggest number of transactions in a single month since
July 1997.
In the luxury
sector, the number of sale transactions exceeding HK$10 million saw
growth of 40 per cent between September and November compared with the
year-ago period.
