Record prices for luxury flats in Hong Kong’s North Point unlikely to boost whole area

Record prices have been set at a luxury flat development in Hong Kong’s Island East district recently, thanks to strong demand, but there is unlikely to be a knock-on effect on other property in the area, where the housing stock is much older, analysts said.

Developer Sun Hung Kai Properties sold four units at its Victoria Harbour development in North Point on Friday, with one, the 1,585 sq ft Flat 11A in Block 1, selling for HK$102.8 million (US$13.2 million), or HK$64,887 per square foot, a new record in terms of square footage for the Island East district, according to the Sales of First-hand Residential Properties Authority.

But the high prices are unlikely to significantly boost values of other property in the area.

“The project is unique because of advantages such as its relatively low density and proximity to the MTR station, shopping malls and hotels. In contrast, other housing estates in the area are too old to sell for similarly high prices,” said Derek Chan, head of research at Ricacorp Properties.

For instance, the price per square foot of Flat 26B at Block 10 at the 32-year-old City Garden, a housing estate near the Victoria Harbour development, was HK$15,576 in a transaction on Wednesday, more than four times lower than its luxury neighbour, according to Midland Realty.

The outlay of HK$102.8 million for the Victoria Harbour unit would buy a 2,429 sq ft flat at Twin Brook in the prestigious southern district of Repulse Bay, according to a listing at Landscope Christie’s International Real Estate.

The total sum of the four Victoria Harbour units sold on Friday amounted to more than HK$350 million, prices that analysts said reflected supply and demand as well as the prestige of the development.

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“New residential supply from this year to 2022 will be very limited on Hong Kong Island, accounting for only about 10 per cent of total supply,” said Thomas Lam, head of valuation and consultancy at Knight Frank.

The development is also on one of the best sites with a full view of Hong Kong’s famous harbour, even though North Point is a traditional blue-collar area.

“The location is not the best when it is in North Point, but it is very prestigious in term of building quality and view,” he said.

The development is located on the site of the North Point Estate, a public housing complex that was demolished in 2002. Sun Hung Kai Properties bought the 310,000 square foot site in two parcels in 2012 and 2013.

The Centa-City Leading Index, a gauge of home prices in Hong Kong, eased 0.36 per cent to 165.02 for the week ended December 31, after rising 14 per cent since January last year.