Hong Kong property

Hong Kong home prices might surge by 10 per cent this year, says sales head at Henderson 

Land and home prices in the city have risen consistently since the fourth quarter of 2016

PUBLISHED : Friday, 16 February, 2018, 8:21pm
UPDATED : Friday, 16 February, 2018, 8:39pm

Hong Kong, the world’s most expensive real estate market, could see home prices rise by another 10 per cent this year after a 14 per cent gain last year, according to the head of sales at one of the city’s largest developers.  

The projection reflects the higher cost of land acquired two years ago, said Thomas Lam Tat-man, general manager of the Number One sales department of Henderson Property Agency, a unit of Henderson Land Development. 

“I expect home prices to rise some 10 per cent for the whole of this year,” he said on Friday after a Lunar New Year event. “It is a reflection of soaring prices of land sold over 20 months ago via government land sales or secondary market sales.”

Land and home prices have been rising consistently since the fourth quarter of 2016, he said. The Centa-City Leading Index, which tracks the city’s secondary private home prices, has risen by about 20 per cent since the fourth quarter of 2016.  

Prices of previously owned homes rose for a 21st month in December, according to the Rating and Valuation Department, their longest stretch of gains since 1993, driven by demand for small and more affordable flats. 

Lam said Henderson Property Agency plans to launch 3,000 new homes this year, mostly in urban districts, including a project in Aberdeen next month. Lunar New Year discounts of HK$10,888 to HK$68,888 – available until March 5 – on some flats in five projects were announced by Lam on Friday. 

Other developers have also offered discounts to drum up sales during the Lunar New Year holiday, a traditional low season for home purchases. 

Sino Land announced holiday cash rebates of HK$38,000 to HK$188,000 for buyers of its projects in Sai Kung, while CK Asset offered apartment buyers cash rebates as well as electrical appliance coupons of up to HK$238,000. 

However, given the rising property prices, these rebates might only partially offset the impact of price increases in some cases. For instance, the HK$38,000 cash rebate to buyers of Sino Land’s The Mediterranean project in Sai Kung amounts to only a fraction of the 3 per cent price increase announced this month. The asking prices for some flats in the project are between HK$8.5 million and HK$14.2 million.

Lam said Henderson Land will continue to scout for opportunities to acquire land in prime locations.

The company last week struck a deal to pay HK$16 billion for two of four Hong Kong residential plots in Kai Tak bought about 15 months ago by the debt-ridden mainland conglomerate HNA Group.

Lam declined to comment when asked if Henderson would be keen to buy the remaining two plots from HNA. 

He said the company was conducting market research on buyers’ preferences and rivals’ offerings before deciding on the sizes and features of flats to be built on the two plots in Kai Tak, East Kowloon, the site of Hong Kong’s former airport.  

“We will aim to develop the sites as soon as possible, but the fastest that flats can be sold there will be [around 30 to 36 months later],” he said, adding that most flats to be built on the two lots will have seaviews and easy access to the subway and sports facilities.   

When asked if Henderson might be inclined to offer more small flats, as prices for these have soared the fastest in recent months due to their relative affordability, Lam said such decisions will be affected by various factors, including a project’s site location, project scale and lot size.  

Since 2003, home prices in Hong Kong have soared by 430 per cent, making the city the most expensive place in the world to buy a home among 406 urban centres tracked by the Demographia International Housing Affordability Survey.