Buyers Can Finally Snag a Deal in the World’s Most Expensive Housing Market

Sales and home prices in Hong Kong have deflated—we’ve pinpointed three markets where luxury buyers should look

Analysts and experts expecting a recovery eventually as interest rates decline. Manson Yim / Unsplash

Hong Kong is in a housing sales slump, meaning thoughtful buyers can get a piece of luxury for less these days—if they know where to look.

Properties lingering on the market offer one opportunity—notable examples including 10B Black’s Link, one of the Victoria Peak mansions owned by former Evergrande chairman Hui Ka Yan. Recently priced at HK$880 million (US$112 million) it has struggled to sell in Hong Kong’s challenging market. For other buyers, it’s browsing the city’s various areas to find the right blend of luxury property, amenities and price.

“Blue chips are always in demand and price, as well as the opportunity to buy, is the key,” said Chris Liem, principal and owner of Engel & Völkers Hong Kong. During good economic times “[affordable] prices or even the ability to purchase a legacy property is nonexistent.”

Despite reduced stamp duty costs at the end of October, housing sales haven’t risen significantly, leading to discounts and stagnation for sellers. For the first time since tracking the data, property sales fell to zero at the city’s top 10 private housing estates over the four-day weekend of Chinese New Year celebrations. High taxes, which Liem said he expected to see change in the forthcoming budget, mean properties are mostly purchased by locals and mainland Chinese expats, rather than expatriate buyers.

Earlier this month, Hong Kong’s central bank announced it would retain its 5.75% base interest rate;it stands 500 basis points higher than the 0.75% rate announced in March 2022. Analysts expect that the U.S. will cut interest rates this year, and because of the Hong Kong dollar’s peg to the U.S. dollar, the city-state will follow suit.

Even still, property agency Savills forecast this month that the average price per square foot for a prime home in the city—the most expensive luxury market it tracks—will decline by as much as 10% by the end of this year.

With analysts and experts like Liem expecting a recovery eventually as interest rates decline, now can be a good time to buy in advance of future price growth and market stability. Here are three neighborhoods in each of Hong Kong’s major districts that offer compelling value propositions for luxury buyers to meet their unique lifestyle needs.

Hong Kong Island: Mid-Levels

“In key areas there is opportunity to pick up amazing assets,” said Liem. Look no further than Mid-Levels, one of Hong Kong’s traditional luxury neighborhoods. Located on Hong Kong Island between Victoria Peak and the central business district, Mid-Levels is densely populated and comprises mostly high-rise residences. It’s connected to the central business district by an 800-meter pedestrian escalator, which offers users city views along its path.

According to Midland Realty, the most recent average price per square foot by transaction in Mid-Level Central was HK$28,578, and HK$23,009 in Mid-Levels West. Though Mid-Levels West has the lower average, the Mid-Levels Central average was down 14.12% between January and February. (Month over month figures are as of Thursday.)

Mid-Levels, home to nearly 50,000 people, is popular with expatriates and local luxury buyers who want easy access to food, nightlife and the best the city offers. The area’s per square foot average is nearly half of the adjacent ultra-affluent neighborhood, the Peak.

There is limited new supply of housing in the future in Mid-Levels, said Martin Wong, Knight Frank’s associate director, research and  consultancy, for Greater China. Housing stock is mostly densely populated, high-rise residences and some colonial low-rises. Many units, particularly older ones, are below 2,000 square feet.

Wong noted buyers may find bargain deals here through distressed asset purchases, offering a chance to enter traditional Hong Kong luxury at a lower price point.

In an example of the deals to be had, Liem’s firm recently managed a sale on swanky Conduit Road for a bargain HK$13,000 per square foot. A more typical average is HK$20,000 to HK$25,000 per square foot—and at the most luxurious end of the market, in buildings like the Morgan, up to HK$50,000.

Kowloon: Kai Tak

In the Kowloon region, Wong suggested a neighborhood that requires some forward thinking. The Kai Tak district, located about 15 minutes by car to the Central Business District and 10 minutes to West Kowloon is still an appealing option for some luxury buyers looking for financial upside in the long-term.

Until 1998, the Kai Tak district was home to Hong Kong’s airport. Today, it’s a crucial part of the city’s new housing stock—anticipated to house about 86,000 residents in the future, nearly seven times today’s population. In the 30 days through Thursday, according to Midland, transactions per square foot averaged HK$19,025, up 1.7% month over month. Listings ranged from HK$13,194 to HK$59,237 per square foot.

“Kai Tak is the only new development area in urban Hong Kong,” Wong says. He says it’s a good option for young, high-income families. Unlike traditional luxury areas, it’s poised to offer convenience at the expense of exclusivity, including the amenities of a second central business district—part of the development’s original goal. Cancellations and delays have some questioning the future prospects of Kai Tak, along with the city’s decision to allow low-income housing temporarily on a high-value land tract.

“I think oversupply and lack of current infrastructure [in Kai Tak] means it will be a long tail to pick up benefits,” said Liem.

But Kai Tak still holds appeal to high-end buyers. Recently, the Pano Harbour development—named for its panoramic view of Victoria Harbour from its former Kai Tak runway perch—sold its first penthouse for over HK$95 million.

Once development gets underway, Wong is optimistic about its prospects. “I think that area will actually be an emerging luxury area,” he said.

New Territories: Tuen Mun

For a different flavor, head to the New Territories—which make up about 85% of Hong Kong’s land mass and borders mainland China. Tuen Mun, which has a population of about 488,000, offers residents beautiful coastlines and mountains, about 35 kilometers northwest of the central business district.

In Tuen Mun Town Centre, Midland notes an average transaction price of HK$10,306 per square foot, up 3% month over month to mid-February, and in Tuen Mun Ferry buyers paid HK$9,206 per square foot on average, a 2.24% month-over-month increase.

Liem said it offers hidden value, particularly for executives or business owners with businesses or factories in the Guangdong-Hong Kong-Macau Greater Bay Area, accessible via the Macau-Zhuhai bridge. Tuen Mun offers easy access to this region, including proximity to the airport and the Mass Transit Railway.

Wong said Tuen Mun’s luxury housing stock is limited to some penthouse units and houses, but there are also high-end developments in the area. This includes nearby Hong Kong Gold Coast, a complex including 20 residential buildings, a resort hotel, marina, shopping mall and beach.

A special bonus for families is that the co-educational Harrow International School of Hong Kong—the first British boarding school to open in Hong Kong, is located here. “Buyers are usually local and mainland buyers who want to get their kids into Harrow,” Wong said.

According to Midland, the top end of the residential market is approximately HK$28 million in Tuen Mun Town Centre, a fraction of the top-end luxury prices in Hong Kong’s blue-chip areas.

Via Mansion Global

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