Hong Kong's luxury home prices will outperform mass market

PUBLISHED : Tuesday, 16 June, 2015, 8:48pm
UPDATED : Tuesday, 16 June, 2015, 8:48pm

Luxury residential prices in Hong Kong are expected to outperform the mass market over the next 12 to 18 months due to the potential stemming from a rallying stock market and the sustainable recovery in rents, BNP Paribas said.

Prices of luxury homes of 100 sq metres (1,076 sq ft) or above will grow 10 per cent this year and a further 10 per cent next year, according to the investment bank. This compares with its previous forecasts of 10 per cent and 5 to 10 per cent growth, respectively.

BNP said a potential rate rise in the second half of this year would be more likely to affect the mass market and that market would face a higher potential policy risk from an overheating market.

According to Centaline Property Agency, the latest Centa-City Leading Index rose 0.95 per cent week on week to a record 143.31. The index is up 8.2 per cent this year.

The agency expects home prices to rise 5 to 10 per cent in the second half of the year.

A number of projects will be sold this week, in the latest gauge of buyers' sentiment.

Sun Hung Kai Properties released the first price list of Ultima in Ho Man Tin last week, including 52 units at an average of HK$36,616 per square foot.

The average selling price after the maximum 12.5 per cent discount is HK$32,039 per square foot. This was about 35 per cent higher than prices at recent launches in the district, BNP said.

The project has 256 units of between 885 sq ft and 3,406 sq ft. The developer plans to offer 38 units on Wednesday.

Sino Land and K Wah International will launch 388 units at their jointly owned Corinthia by the Sea in Tseung Kwan O. The average selling price of the 388 units is about HK$13,400 per square foot after discount, similar to the recent launches of SHKP's Wings IIIA and IIIB.

The project has 536 units sized between 359 sq ft and 761 sq ft. The developers plan to launch the sale on Thursday and nearly 6,000 deposit cheques had been received by 5.30pm on Tuesday, according to Sino Land.

Hong Kong home prices rose 19 per cent year on year, Knight Frank's Global House Price Index for the first quarter shows.