Hong Kong luxury home sales recover from Covid-19-induced slump, to hit record high this year

Hong Kong luxury home sales recover from Covid-19-induced slump, to hit record high this year

Sales of luxury homes in Hong Kong are likely to hit a record high this year, after activity slumped last year as buyers stayed on the sidelines because of the Covid-19 pandemic.

Transactions of homes worth more than HK$100 million (US$12.8 million) in the first 11 months of the year reached HK$46.4 billion (US$5.95 billion), nearly matching the all-time high of HK$46.6 billion achieved in 2018, according to Colliers.

“If transactions in December exceed HK$200 million, a new record will be set this year,” said Hannah Jeong, head of valuation and advisory services at Colliers in Hong Kong. The value of luxury residential transactions from January to November was 60 per cent higher than the HK$29 billion for the whole of 2020, she added.

The surge in luxury home sales has been remarkable given that the city’s borders have been closed since early last year to stem the spread of Covid-19, which has kept some offshore capital from entering the market.

The listing of several mainland Chinese companies on the Hong Kong stock exchange is likely to have boosted appetite for upscale homes in the city from the newly minted billionaire founders of these companies, market observers said.

A total of 71 companies raised US$35.9 billion in the first nine months of the year through initial public offerings (IPOs) and secondary listings in Hong Kong, according to data compiled by Refinitiv. Seven of the 10 largest IPOs were US-listed Chinese tech companies seeking second or dual primary listings in the city.

Deals for 224 luxury residential units were concluded so far this year, 33.3 per cent higher than the 128 in 2020, with about half of the buyers from mainland China, Colliers data showed.

Tang Lai Ching, the wife of SF Express founder Wang Wei, spent HK$493.2 million on three luxury properties in Mid-Levels in January, local media reported.

“Despite the sales velocity being slower for some of the newly launched projects, the prices [of luxury homes] increased 4.5 per cent,” Jeong said.

Hong Kong’s luxury property market saw a correction between mid-2019 and end-2020, a period marked by the anti-government protests and four waves of the Covid-19 pandemic, according to JLL. Prices fell 12.6 per cent during the period.

As of the third quarter this year, prices of luxury homes had rebounded by 5.7 per cent.

Hong Kong luxury home sales recover from Covid-19-induced slump, to hit record high this year

One of the houses on 77-79 Peak Road, The Peak, developed by Wheelock Properties, was sold for HK$601 million in April. Photo: Winson Wong

“Despite a somewhat higher supply of large size units in the near term, truly luxury units in desirable locations will continue to be acquisition targets by wealthy buyers both as a dwelling and prime investment asset,” said Nelson Wong, head of research at JLL in Greater China.

“Looking ahead, the capital values of luxury residences are likely to follow the momentum in transaction volume and nudge higher amid the recovery.”

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