Chic apartments in convenient locations are selling like hot cakes at premium prices, as investors target single-block luxury flats.
New residential blocks on Hong Kong Island have attracted strong interest, given their prime location and tight supply. Popular projects on sale now include Henderson Land Development's High West in Western, Kowloon Development's Cadogan in Kennedy Town, and Kerry Properties' The Altitude in Happy Valley.
What really appeals to residents are the chic living atmosphere and lifestyle, with everything close and convenient in the neighbourhood.
The Altitude has even engaged Indigo Living to provide interior design advice and special furnishings.
Thomas Lam, head of research for Greater China at Knight Frank, says single-block residential projects usually involve a small number of apartments.
'So long as the selling prices are near the secondary market rates, these properties can sell quite well. This is especially true on Hong Kong Island, where new projects available now are mainly smaller in scale and often standalone developments,' Lam says.
The only disadvantage of single-block projects is the lower efficiency ratio, but that does not seem to have dampened investor-interest in them, he says.
New small-scale apartment developments in Western and Kennedy Town have drawn quite a number of purchasers recently.
High West, providing a total of 133 units - mainly one-bedroom apartments - is a market hit. Most units sold within a week, with an average price of HK$17,000 per square foot.
With 197 apartments from one- to three-bedroom units, Cadogan also saw brisk sales, with some flats selling for about HK$17,500 per square foot.
Jimmy Lee, district sales director of Midland Realty, says projects such as High West and Cadogan have attracted investors with a positive outlook. The prospect of the completion of the MTR extension to Western and Kennedy Town by 2014 will represent good potential for new projects located near future MTR stations, which will make them just a short ride to Central.
'We see many investors with a long-term [view] buying into these small-sized luxury apartments that offer attractive rental yields at this point in time. It appears to be better off for them to park money with these smaller apartments than going after excessively expensive shops today,' he says.
Lee points out that new boutique luxury flats in or near Central are commanding high rents and for those new projects, the rental rate may increase by HK$60 per square foot a month, thus offering investors a yield of up to 3 per cent. He adds that some local families are buying these new small-sized apartments for future use by their children and, in the meantime, will rent them out.
At the high end, standalone luxury projects in the Mid-Levels area include 39 Conduit Road, Argenta, Azura and Seymour. Earlier, two 2,348 sq ft apartments at Seymour were sold at HK$72.78 million and HK$71.61 million, with an average price of more than HK$30,000 per sq ft.
Cheung Kong is also selling its new project Kennedy Park at Central, with some units going for more than HK$28,000 per sq ft. There are a good number of single-block projects elsewhere, such as Park Haven in Causeway Bay, One Wanchai in Wan Chai, Harbour One in Western and Mount East in North Point.
In Kowloon, among the hot properties for sale are Kowloon Development's Gardenia in Mong Kok and Emperor Group's The Prince Place in Kowloon City. Upcoming luxury developments include Swire Properties' 53-unit project at Argyle Street and Wheelock Properties' 66-unit Kadoorie Hill at Prince Edward Road West.
Wong Leung-sing, associate director of research at Centaline Property Agency, says there is strong leasing demand for small-sized and boutique apartments from a growing number of local and foreign high-income single executives.
'These high-income earners are living a hectic working life. They are looking for nice and cosy accommodation near their offices, thus allowing them to make the best of their time to enjoy a lively urban life,' he says.
'The modern small-sized apartments fit into their specific needs. Although small, these flats have basically everything you need from well-structured interior fittings to a tiny balcony and clubhouse facilities. New projects near the Central business district are especially in demand.'
Wong says developers have spotted the market needs to turn their small-sized projects into apartments for people to live a 'Manhattan-style' life near the prime business district.
Investing in boutique apartments appears to be a trend that is likely to gain further momentum amid the prevailing low interest-rate environment.