• Habitat Property forecasts strong performance for Hong Kong’s luxury residential market

    3 July 2018

    (June 2018, Hong Kong)  – As the first half of 2018 comes to a close, real estate entrepreneur Victoria Allan has an optimistic outlook for Hong Kong’s burgeoning luxury residential property market. The founder of leading boutique real estate agency Habitat Property, Victoria has gained a reputation as a housing guru with a passion for discovering truly unique Hong Kong homes. Drawing on her more than 25 years of experience and intricate understanding of the city’s high-end residential real estate, Victoria shares her forecast for the rest of 2018 and key reasons why this will be one of the strongest years in recent memory.

    Habitat Property’s High-End Residential Sales in 2018 Already Equal 2017 Volume

    Compared to the last six years, Victoria has seen 2018 proving to be one of the top performing years for Hong Kong’s luxury residential market. By the first half of 2018, total sales volume for Habitat Property will equal the whole of 2017, while the firm anticipates that prices will rise by 10% by year-end.

    In 2018, Habitat Property has seen the market stabilise and continue trending upwards thanks to a number of factors. Hong Kong’s stability and tax-friendly environment compared to other markets is attracting investment and boosting increased buyer confidence. Infrastructure initiatives that improve connectivity such as upgrades to high speed rail and the MTR network have also presented additional opportunities for the property market.

    In terms of interest rates, Habitat Property forecasts the market to rise in the vicinity of 1-2% over the next 18 months – 2 years. At this incremental level, increases are relatively contained and will not contribute to market correction in the secondary market, a healthy indicator moving forward.

    “While the residential market should become even more stabilised in 2020, the primary market is threatened by developers who increase lending at higher interest rates. This is a potentially risky practice for buyers who over-leverage themselves in the primary market. On the other hand, banks have recently been offering more conservative loan packages, helping to stabilise the market, especially within the secondary market. However, when it comes to high-end residential, full cash transactions are commonplace and mortgages frequently take a backseat,” Victoria commented.

    Design-Driven and Lifestyle-Seeking Buyers Look for Value-Adding Elements

    Over the past five to ten years, Victoria and Habitat Property have seen a number of trends emerging in luxury residential real estate to propel the industry in new and exciting directions.

    When looking at buyer trends, both Hong Kong and mainland Chinese parents are buying flats for their children and most buyers are very informed and more focused on the lifestyle scene as an important factor. According to Habitat Property, nearby cafes, restaurants, parks and easier commutes to Central and schools are all playing a bigger role in buyer decision making. Design is also becoming a major driver, as younger educated Chinese buyers are exposed to international designs; for example, Habitat Property sold a walk-up apartment with no facilities or security to a young mainland Chinese buyer (mid 30s) last year, an uncommon occurrence. Such sales show that Chinese buyers are more and more interested in undervalued older blocks that have the potential to be redeveloped into something more – namely an abode that fits their design aesthetic. While buyer attention has traditionally focused on new developments, Victoria projects that the landscape may continue to shift as the perception of the secondary market evolves.

    Hong Kong Island’s Southside, Stanley and Secondary Market Trending Upwards

    While The Peak continues attracting major interest from Habitat Property clientele, buyers are exploring areas like Southside which offer slightly better prices and more properties to select from. Hong Kong Island’s secondary market including higher-end areas like Stanley and the continually developing Western side of the Island (Sheung Wan, Kennedy Town, Sai Ying Pun) is also increasingly seen as a better area for investment.

    While the secondary market continues to heat up on Hong Kong Island, new luxury properties are increasingly seen popping up in Kowloon. A rising number of new micro and nano-flats has also caught the public eye, but these do not meet the commonly accepted definition of high-end luxury residential where properties are typically over 1,200 sq ft. at prices exceeding US$10 million (HKD$78 million).

    As an investment option, properties are seen as a good long-term investment that balance higher-risk investments while appreciating more than low-risk bonds. When giving advice to buyers, Victoria always urges them to search for value-adding elements when considering properties. “From the lifestyle of the surrounding neighbourhood to the viability of upgrading and decorating the space itself, investors should always be looking for elements that enhance their property and maximise its rental return.”

    Another tip from Victoria is to consider buying property under a company structure. This is an attractive option for Hong Kong’s high-end buyers, while providing future flexibility to on sell and finance 6 months later.

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