• Colliers analysis: Continued resilient demand driving the luxury residential market

    20 August 2021

    (19 August 2021, Hong Kong) Leading diversified professional services and investment management company Colliers (NASDAQ and TSX: CIGI) has today released a White Paper titled ‘Luxury residential Market H2 2021’, which sheds light on the performance of the Peak and the Southern sub-markets of luxury residential sector, and explores these sub-markets’ outlook for the remainder of 2021.

    After a considerable momentum slump in Hong Kong’s luxury residential sector (more than HK$100 million worth) from H2 2019 to H1 2020, activity has started to pick up again since H2 of 2020, especially in the Peak and Southern sub-markets. On the sales side, the number of transactions for H2 of 2020 reached 20, up 54% YOY. The surge carried forward into 2021, creating a strong H1 where there were 30 transactions, a 500% increase YOY. The total price consideration between July 2020 and June 2021 came in at HK$12.8 billion, a 115% increase over the same period one year before, to HK$5.9 billion.

    “We have seen more transactions in H2 2020- H1 2021 despite the pandemic, as the purchasing price has become more attractive given the luxury residential property price has now come to HK$80,000 to HK$100,000 per sq. ft. range,” said Hannah Jeong, Head of Valuation & Advisory Services in Hong Kong

    “Amid growing optimism of Hong Kong’s economic recovery and the pandemic being brought under control, the demand will remain healthy. We forecast a gradual price growth of 3% for H2 of 2021,” added Jeong.

    Luxury properties soliciting equal interest from mainland Chinese and wealthy locals    

    Both mainland Chinese and wealthy locals contributed equally for the amount towards the rapid transaction volume of the luxury residential market from 2020 to H1 2021, with mainland Chinese executives and high-profile professionals continued to make headlines. In March this year, Wharf sold five houses at 77/79 Peak Road on the Peak, with two being bought by mainland buyers and the rest were bought by wealthy locals. Moreover, among the 17 houses sold at Mount Nicholson in the Peak since sales launched in 2016 to H1 2021, 10 of them were bought by mainland Chinese buyers.

    “Market evidence points towards luxurious apartments have become a more attractive asset type compared to houses, as apartments offer more flexibility and require a lower lump-sum consideration, comparatively offering more opportunities. Mount Nicholson is a prime example, the mixed product offering of both houses and apartments has seen the latter achieve higher unit rates and expedited take-up,” said Jason Fung, Director of Valuation & Advisory Services in Hong Kong.

    Hong Kong as IPO hub driving luxury residential market

    Hong Kong’s IPO market has been buoyed with positive market sentiment. Since the beginning of 2020 to H1 2021, according to HKEx, there were 180 IPOs listed, accounting for a total of more than HKD600 billion. With companies listing in Hong Kong, this brings new waves of c-suite entrants and high-net-worth individuals into the Hong Kong market, who are prime candidates for purchasing luxury residential properties.       

    “Hong Kong’s luxury property sector sees great investment potential, benefiting from rising number of IPOs listed on the Shenzhen Stock Exchange as well. Among the listings since 2020, 25.6% were from companies based in Guangdong Province. Because of the proximity to Hong Kong, the c-suites of those listed companies would be likely to look for property investment opportunities in Hong Kong,” said Rachel Chin, Associate Director of Valuation & Advisory Services in Hong Kong. To find out more about the trend of Hong Kong’s luxury residential market and what it could mean to buyers, investors and developers, click here to download the full White Paper.

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