Luxury-sector outlook mixed

PUBLISHED : Wednesday, 19 May, 1999, 12:00am
UPDATED : Wednesday, 19 May, 1999, 12:00am

Opinions are divided on prospects for the luxury sales market as analysts ponder the speed of economic recovery amid worries of a turnaround in interest rates.

Landscope Surveyors managing director Koh Keng-shing said the sector had seen transactions fall recently, with buyers faced with balancing positive and negative news.

The sale of a luxury North Point residential site at a higher than expected price at last month's government auction had given a lift to the market, but the effect had proved to be short-lived.

When home sellers raised prices, buyers had backed out, which reflected the market was not yet ready for a full recovery.

There were signs that the downtrend in interest rates was going to end, and the worry was whether they would start to go up again, Mr Koh said.

Also, the economy remaining weak did not provide the conditions for luxury prices to recover soon.

Mr Koh predicted the luxury sector would continue to be volatile in coming months.

Fortune Realty western Mid-Levels branch manager Casey Tsang said luxury transactions had dropped as buyers preferred to wait for direction.

But he expected activity and prices to pick up again provided the coming sales of new luxury projects such as The Belcher's in Pokfulam were well received.

Colliers Jardine research director Simon Lo was more optimistic, expecting luxury prices on Hong Kong Island to increase by 8-14 per cent over the remainder of the year.

He said the anticipated economic recovery would be the single biggest factor driving prices.

Mr Lo expected to see slight positive GDP growth in the third and fourth quarters due to the building of major infrastructure projects and an upturn in retail spending.

Retail sales, an indicator of the buoyancy in the property market, should improve during the second half of the year, he said.

Mr Lo said the number of luxury transactions should increase by 19 per cent during the second quarter thanks to recent cuts in interest rates.