Hong Kong’s luxury property market is buzzing as buyers see no deterrent in hefty stamp duties, security law controversy

Little known Phoenix Technology and Times Square Overseas buy two villas in Kowloon Tong amid city’s economic woes
Latest purchases likely rank among the five highest amount of property stamp duty in Hong Kong

Hong Kong property

Sandy Li

Published: 8:30am, 16 Jun 2020

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Hong Kong’s luxury property market is getting an endorsement from a couple of little-known investors, who are paying hefty stamp duties by picking up swanky villas amid the city’s economic and political troubles.

Phoenix Technology International Limited bought a 5,148 square feet villa at Mont Rouge in Kowloon Tong for HK$370 million (US$47.7 million) from builder Kerry Properties, according to a Land Registry filing on June 12. Times Square Overseas Company paid HK$350 million for another lot in the same development.

The Phoenix transaction is likely to entail a 30 per cent stamp duty amounting to HK$111 million, the fourth highest on record. The initial agreement was signed on May 26, barely days after China surprisingly unveiled the controversial national security law tailor-made for Hong Kong.

“This company is willing to pay such a large property tax, which may indicate it has special interest such as favourable feng shui,” said Thomas Lam, executive director of Knight Frank. “This deal also shows the richest still have confidence in ultra-luxury homes in Hong Kong.

Phoenix Technology could not be immediately reached for comment. Little is known of the company, whose director is listed as Jacqueline Cressot, a French passport holder.

The buyer paid HK$71,873 per square foot for the property known as Villa 2 at 9, Lung Kui Road in Beacon Hill. It includes a 1,901 sq ft garden and a 966 sq ft roof top and comes with furniture and fittings, based separate filing at the Sales of First-hand Residential Properties Authority. Times Square Overseas paid HK$68,253 psf for its unit known as Villa 3.

The National People’s Congress, China’s highest legislative body, passed a resolution on the security law on May 28, triggering an international outcry that such a move may erode the city’s autonomy. The decision has also reignited protests in the city, albeit on a smaller scale, against China’s power grab in the city.

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Hong Kong’s economy contracted by 8.9 per cent year on year in the first quarter, the worst since records began in 1974, hurt by months of anti-government protests, US-China trade war and the coronavirus pandemic.

Sales of luxury homes on Mid-Levels jumped last month to 84 deals, the highest in 12 months, as prices slumped, according to Centaline Property Agency, representing a 68 per cent jump above the volume recorded in April.

The HK$111 million stamp duty on the Phoenix transaction will be a boon to the city’s stretched coffers, following the government’s HK$139 billion budget deficit proposal to help shore up the economy.

Only three other deals have involved higher stamp duties. In 2017, a buyer paid HK$324 million on No. 1, Mount Nicholson on The Peak, while another investor paid HK$219 million for Twelve Peaks, also on The Peak, in July 2018. The other record was HK$140 million for 90, Repulse Bay Road property in 2018.

“The economic contraction appears to have limited impact on technology firms, while old-economy businesses like retail, food and beverages are hit hardest,” said Koh Keng-shing, founder and chief executive of Landscope Christie’s International Real Estate.

The number of transactions for homes costing HK$50 million or above have increased in recent months “as owners become more realistic and willing to cut prices by about 20 to 30 per cent,” he added.

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