Kowloon apartments could see prices surge as Express Rail Link opening approaches
Mong Kok and surrounding areas are expected to see positive spillover from the high-speed rail terminus opening in the third quarter, according to agents
Philip Chau, a Mong Kok resident who lives with his parents in a housing estate near Austin Station and the soon-to-be completed high-speed rail terminus, has witnessed dramatic change in his neighbourhood during the past decade.
The area has undergone surging home prices and an infusion of new shops and restaurants as it transforms into a major transit and shopping hub.
“My family bought the flat for about HK$3.8 million (US$484,184) a year before it was announced the [Express Rail Link] terminus would be located near the region,” he said. “There are a greater variety of restaurants now, instead of just McDonald’s.”
The terminus – built at a cost of HK$86.42 billion – is expected to cut the journey time from Hong Kong to Guangzhou by half, making rail transit between the two cities possible in under an hour when it opens in the third quarter of this year.
The Transport and Housing Bureau has predicted 109,200 annual passengers will make use of the high-speed rail line.
Since Chau’s family bought the 592 square foot unit in the 18 block development Charming Garden, prices have increased several times. The development, completed in 1998, was built under the government’s Home Ownership Scheme. Chau’s parents purchased the unit at the prevailing market rate that included an offset premium that went to the government.
A similar sized three-bedroom flat in the block was sold in late March for HK$9.2 million, or HK$15,541 per sq ft, up 469 per cent compared to its previous transacted price of HK$1.62 million in March 1999. The recent settlement price reflects the premium offset not included in the original purchase price, as required under transfer of ownership rules set by the Housing Ordinance.
“Now we have more trouble related to the noise as there is a new school and more restaurants,” Chau said, adding that construction works for the rail terminus have gone on for eight years.
Meanwhile, flats nearby Austin Station and Kowloon Station are expected to be star performers this year, according to analysts.
“Prices of homes near the terminus rose 10 per cent last year,” said Sandia Lau, director of Kowloon’s residential division at Centaline. “Prices may rise a further 15 per cent this year.”
Based on her experience, openings of major infrastructure works can lead to gains of 20 to 25 per cent at major housing estates.
The Austin, a four-year-old development that is among the closest to the rail terminus, has seen units recently sell for as much as HK$31,370 per sq ft, up 37 per cent compared to its launch four years earlier, according to Centaline.
The new railway may also bring greater traffic and higher tourist spending to the area.
“There are more new shops,” said Gilbert Liu, project manager of Midland IC&I. “The opening also enhanced the commercial value of the area as rents tend to increase.”
“In particular, for street shops in Jordan, the number of property transactions surged by half last year, with the price per square foot edging up by 3 per cent. Rent per square foot also rose by 5 per cent.”
Liu said property transactions are expected to rise by 15 per cent, with the price and rent per square foot expected to rise by 6 to 10 per cent.”
There might be a 5 per cent rise in rents at the Elements shopping centre at Kowloon Station because of its ability to draw shoppers with its “large scale and amenities”, according to Terence Chan, Hong Kong’s head of retail at JLL.
JLL also believes hotels across all segments will benefit from the opening.
“The shorter travel times arising from the high-speed rail link will enable more business travellers to base themselves in Hong Kong rather than having to stay overnight in Shenzhen or Guangzhou,” said Denis Ma, head of research at JLL. “The increase in mainland visitors should support the three-star hotel market while business travellers will support four-and five-star hotels.”
“Room rates have shown steady improvement in line with the recovery of the inbound tourism market,” Ma said. He said revenue per room is likely to rise by about 5 per cent once the station becomes operational, adding to a 2.4 per cent gain last year.
In a related development, the commercial land parcel atop the terminus will open for public tender in May. Valued at up to HK$142 billion, the site will yield 3.16 million sq ft of gross office space spread across three grade A office towers.
JLL’s Ma said the new office space would likely be popular among local and Shenzhen’s companies.