Wealthy mainland Chinese back into Hong Kong super-luxury home market
Mainland Chinese buyers have gradually come back to Hong Kong’s top-end luxury home market as the super-rich look to diversify their assets given the country’s slowing economy, according to property consultants.
They are looking for niche areas in prestigious locations in the city as these high-end products provide growth potential due to their limited supply, they said.
During the first 10 months of 2015, buyers of four out of the top 10 luxury deals were from the mainland, according to Knight Frank.
“The financial market turbulence in the third quarter and the devaluation of Chinese currency have prompted more affluent mainlanders to look for asset diversification. Hong Kong’s top-end luxury market is their option,” said Thomas Lam, head of valuation and consultancy at Knight Frank.
As an example, the house at 22 Barker Road was sold to Alibaba’s Jack Ma Yun, for HK$1.5 billion or HK$151,000 per square foot in terms of saleable area in the third quarter, breaking the average price record in Hong Kong.
Lam said mainlanders hesitated to enter the market in the past two years because of the introduction of buyers’ stamp duty in 2012, which requires non-locals and companies owned by locals or foreigners to pay an extra 15 per cent.
Lam said the top end luxury residential market was quiet until the sale of 75 Peak Road, formerly the historic HoTung Gardens, to mainland businessman Cheung Chung-kiu, dubbed the “Li Ka-shing of Chongqing” for HK$5.1 billion at the beginning of the year.
According to Centaline Property Agency, mainlanders accounted for 10.7 per cent of the total number of first-hand home sales in the third quarter, up 2.2 percentage points from the previous quarter. It was helped by an increased number of luxury home sales to mainlanders, said Centaline’s head of research, Wong Leung-sing.
“A niche product in a prestigious location will always find a willing buyer. It is due to an extreme scarcity of available stock,“ said Angel Law, Head of Residential, Investment & Advisory Services
at DTZ/Cushman and Wakefield.
Law, on behalf of her client, is selling a house at 52 Peak Road, with an asking price of HK$500 million.
The property is located on a site of 11,000 sq ft and was built in 1950 with a house area of 4,873 sq ft. Law said the property can be redeveloped into a house with floor area of up to 5,452 sq ft.
“Mainlanders are definitely a major source of potential buyers, “ said Law.
However, she said Hong Kong’s top end luxury market did not only attracted mainland buyers, citing that she received interest from Hong Kong buyers, Asians as well as those from the US and Europe.
“Buyers shift their eyes back to Hong Kong as properties in overseas such as London are expensive and the UK government has recently increased tax charges for property buying,” said Law.
Luxury transaction volumes on Hong Kong Island rebounded to 155 in the third quarter of 2015, a 27 per cent year-on-year increase and the highest since the introduction of double stamp duty in the first quarter of 2013, according to Savills.
Savills said there are concerns about future launches as there will be a high concentration of upcoming completions in Mid-Levels totaling 804 luxury units, or an average of 201 units per annum from 2015 to 2018.
Lam of Knight Frank expects overall luxury residential prices to fall 5 per cent in 2016 but prices for top-end luxury homes will be sustainable although transaction volume will be thin.