HOUSE proud
As Hong Kong's luxury property prices continue to break records, detached town houses have been performing particularly well.
According to Midland Realty, there were 86 transactions worth more than HK$10 million for detached houses last month, a third more than the 64 cases in April. Most sales were in the New Territories, with about half in Tai Po. On Hong Kong Island, there were eight transactions, mainly in Island South.
As for the first quarter, according to Centaline Property Agency, there were 21 transactions involving houses on The Peak and in Island South. So supply is tight in those areas.
While a small number of owners are selling their properties, it doesn't mean they have a bearish market outlook, says Louis Ho, Centaline's general manager for Greater China luxury property.
'Vacancy rates are low and tenants of luxury properties are facing rental increases of 20 to 30 per cent and, in some instances, as much as 40 per cent at the top end of the market,' says Renu Budhrani, executive director of Knight Frank. 'Demand is increasing from end-users and local and international investors.'
Prime locations are The Peak and Island South, followed by Jardine's Lookout and Pok Fu Lam, where houses are predominantly owner-occupied.
'Mainland businessmen have become keen buyers of Hong Kong luxury properties. Their purchasing power has continued to increase and these buyers account for more than half of luxury home purchases,' says Kenneth Chiu, sales director of The Peak and Island South division at Ricacorp Properties.
'They have taken into consideration their children's education, the rule of law in Hong Kong, the economic outlook and their affluent identities. Hong Kong's closer ties with the mainland are also an important factor behind their decisions.'
Recent transactions include Sun Hung Kai Properties' Shouson Peak on 9 Shouson Hill Road. A 4,074 sqft garden villa was sold for HK$180 million, or about HK$44,000 per square foot. Unit A at 3 Plunkett's Road, developed by Tai Chong Development, was sold for nearly HK$400 million, or HK$57,000 per square foot. The largest detached home at 6 Stanley Beach Road, a China Overseas Development project, was sold to a mainland businessman at HK$63,000 per square foot.
'Luxury home prices continue to hit new highs, reflecting the wealth creation ability of the rich and their interest in luxury homes,' Chiu says. 'As the prices of detached houses have already doubled from 1997 levels, it is believed that prices will continue to hit record highs.'
Prime locations remain key. 'It is very rare to find land for development at traditional prime locations such as The Peak and Island South,' says Victor Lui, executive director of Sun Hung Kai Real Estate Agency.
'These areas retain a spacious open environment, yet are very close to the city centre. That's why we have to use the finest construction materials to develop such valuable land. The construction cost per square foot at our Shouson Peak project was about HK$10,000.
'As inflation persists, building materials will become increasingly expensive. Therefore, homeowners are very reluctant to sell - at least not until a good price is offered.'
