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Hong Kong property

‘No cause for alarm,’ development chief says, after HK$2.1 billion Hong Kong house sale sets new record

Chinese tycoon’s purchase in exclusive Peak area won’t affect general public, according to Secretary for Development Paul Chan Mo-po

PUBLISHED : Monday, 06 June, 2016, 10:28pm
UPDATED : Tuesday, 07 June, 2016, 5:25pm

The city’s development chief told the Post that there was “no cause for alarm” after a Shenzhen property firm owner reportedly bought a 9,212 square-foot luxury house at 15 Gough Hill Road on The Peak In Hong Kong for HK$2.1 billion, a record price for the city and among some of the most expensive houses globally.

“It was a super luxury house, and it won’t affect the general public,” Secretary for Development Paul Chan Mo-po said.

“It was also an individual case. Right now mainland, or non-local buyers, take up only a very small proportion in our property market. It is a low single digit, not even four to five per cent, and sometimes it can be as low as one per cent in a quarter of the year. We will keep monitoring, but there is no cause for alarm at this point,” Chan added.

What would you do with HK$2.1 billion?

On May 31, the Rating and Valuation Department’s latest figures showed the general price index for private homes rose 0.7 per cent month on month to 273.1 in April. This was the first recovery after a decline over six consecutive months.

Chan said the increase and the record price at The Peak house did not mean that home prices in Hong Kong were on the rise again.

The purchase was seen by some as the latest sign that affluent mainlanders have been snapping up super luxury houses in the city in view of their limited supply. It broke the record set by the transaction of a 9,890-sq ft luxury house at 22 Barker Road, also on The Peak, for HK$1.5 billion last year.

“I bought [the house] for my own use,” said Chen Hongtian, chairman of Shenzhen firm Cheung Kei Group, which invests in property, hotels and finance businesses in the city. Chen is also a member of the Chinese People’s Political Consultative Conference, a political advisory body.

Chen declined to give the price, but it is believed that the property was sold for about HK$2.1 billion.

That selling price would represent an average of about HK$220,000 per sq ft.

Luxury residential prices in Hong Kong are on course to decline by another 10 per cent over the next three to six months with a possible hard landing in the mainland Chinese economy and increased capital controls restricting Chinese buying interest, according to a research report by Savills in April.

What you can buy for the price of a Hong Kong flat: an Italian castle, a Sydney apartment with harbour views or a Dublin townhouse

But Knight Frank said that while prices of mass housing and luxury residential flats have dropped, those of super luxury houses have not.

In the past 12 months, 50 per cent of the top luxury deals involved mainland buyers, said Thomas Lam, head of valuation and consultancy at Knight Frank.

They are attracted by niche areas in prestigious locations in the city as such high-end dwellings provide growth potential due to their limited supply.

Super-rich still love to buy super luxury homes despite economic uncertainties in Hong Kong

The seller, Hong Kong company Chuang’s Consortium International, had confirmed that it was in discussions with a third party to sell a company which holds the property at 15 Gough Hill Road, according to a company filing to the stock exchange on Monday night. But it said no definitive agreement has been reached.

Chuang’s, chaired by billionaire Alan Chuang Shaw-swee, bought the 18,469 sq ft site for HK$166 million in 2006. It had submitted building plans to build a six-storey house on the site. According to the company’s annual report, the company intended to build a house with a unique architectural design.

Chen said the fact that the house was not yet complete was good for him.

“I can change the layout according to my preferences,” he said.

Cheung Kei was founded in 1990. Chen is also a major shareholder in Hong Kong-listed China South City Holdings.

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