Luxury home sales are on the rise in Hong Kong, one of the world’s most expensive property markets, despite the government’s efforts to rein in the red-hot real estate sector.

In the first quarter, sales of homes priced more than 12 million Hong Kong dollars, or $1.5 million, surged to the highest level since late 2012, according to research by Centaline, one of the largest property agencies in Hong Kong.

A total of 828 transactions were recorded during the period, up 16.3% compared with the number of prime residences sold during the fourth quarter in 2014, Centaline data showed. The 828 transactions were valued at more than HK$21.16 billion, or $2.73 billion.

The southern Chinese city is one of the most popular destinations for luxury home buyers in the region, boosted by its status as a regional financial hub. Skyrocketing home prices in recent years, due to an influx of rich mainland Chinese buyers, have pushed homeownership beyond the reach of many of the city’s 7 million people.

Rising public discontent prompted the government to introduce measures to tame the housing market, including mortgage restrictions aimed mainly at small and medium units, but this has helped divert funds toward the high-end sector.

Hong Kong prime residential prices gained 5.5% in the first quarter compared with the same period a year earlier, according to Knight Frank’s Prime Global Cities Index, which tracks luxury prices in major cities around the world.

“The property market in Hong Kong this year will be led by the luxury segment,” Centaline research director Wong Leung-sing told Mansion Global. “The expansion of the luxury home segment will outperform the broader market.”

However, Wong cautioned that the second half of the year is uncertain given the global economy and a possible hike in short-term U.S. interest rates, which might impact Hong Kong’s property market. Hong Kong’s currency is pegged to the U.S. dollar.

Favorite luxury home areas in Hong Kong are traditionally located in upmarket neighborhoods such as The Peak, Mid-Levels and Happy Valley.

The average per-square-foot price in The Peak neighborhood stood at HK$41,354 ($5,335) in April, up 5.1% compared with a year earlier, while prices for homes in Mid-Levels rose 8.8% year-on-year to HK$27,187 ($3,508) a square foot, according to figures compiled by Knight Frank.

See the full Hong Kong listing (pictured)