The Hong Kong luxury apartment has seen a 1.1% price uptick in the second quarter of this year, as mainland buyers made record-breaking purchases and more local buyers returned to the market, according to the latest report by global real estate services provider Savills released Tuesday.
The price increase is largely attributed to the super luxury segment, where buyers from China’s mainland have been playing an active role. Two record-high purchases made headlines in the second quarter of this year. The first, Hongtian Chen, chairman of Shenzhen-based firm Cheung Kei Group, bought a 9,212-square-foot house at 15 Gough Hill Road on The Peak for HK$2.1 billion, which represented the highest per-square-foot price (HK$228,000) paid for a residential development anywhere in the world.
And, China Horoy, another Shenzhen-based company, bought up all the six units of Severn Villa for a total of HK$1.168 billion.
The two deals have encouraged local high-net-worth individuals to buy houses on the Peak and Southside, priced at between HK$80 million and HK$200 million, according to Savills. As a result, prices for luxury apartments in Hong Kong Island increased by 1.1% from the first quarter, while prices on the Peak and Southside were up 4.3% and 2.5% respectively.
Elsewhere, greater interest from buyers and extremely tight inventory have pushed up the price of townhouses by 1.6%, Savills reported.
The luxury apartment segment was boosted by a few new building launches, namely ALASSIO (61 units) and Morgan (17 units), both in the mid-level luxury markets.
“Successful primary launches are taking luxury volumes back to pre-DSD (double stamp duty) levels,” said Simon Smith, senior director of Asia Pacific at Savills. The luxury sales volume reached 169 in the second quarter, a new high since 2013 when a 15% DSD on non permanent resident and corporate buyers was imposed.
| Price Changes in Hong Kong Luxury Residential Market | |||||||
| Sector | Q2/2016 | Q1/2016 | 2015 | ||||
| Townhouses | +1.6% | -0.7% | +8.3% | ||||
| Hong Kong Island luxury apartments | +1.1% | -2.8% | +9.3% | ||||
| Kowloon luxury apartments | +0.4% | -0.6% | +5.3% | ||||
| New Territories luxury apartments | 0.0% | +1.0% | +6.2% | ||||
| Source: Savills Research & Consultancy | |||||||
Outside Hong Kong Island, luxury prices were relatively flat in the second quarter of this year. The price of higher-end apartments in Kowloon increased 0.4%, while those in New Territories remained unchanged from the first quarter.
Looking forward, Savills forecasted that both townhouse and luxury residential prices to grow around 5% over the next six months, with interest rates remaining low and capital flow continuing into Hong Kong.
Write to Fang Block at fang.block@dowjones.com