Residential property prices in Hong Kong stabilised in June with more activity mainly in the primary sector, as developers launched new projects with deep discounts and other enticements.
According to the Land Registry, residential sales in June edged up 0.7% month on month, reaching 4,620 units. The gain was attributed mainly to robust activity in the new homes market.
Meanwhile there have been more home buyers returning to the market looking for bargains, according to the latest monthly market review report from international real estate consultants Knight Frank.
It points out that several new residential developments were oversubscribed in June. One example was Park Yoho Venezia in Yuen Long, which managed to sell over 90% of its available units within hours on the first day of the launch. This trend is expected to continue, with developers offering deep discounts and aggressive mortgage schemes to boost sales.
Interest in the ultra-luxury residential market showed no signs of abating. For example, the top floor unit in Severn Villa on the Peak sold for HK$232 million or HK$170,463 per square foot, making it the most expensive apartment in Hong Kong.
Knight Frank believes that high net worth individuals are expected to continue acquiring premium residential properties in Hong Kong given their scarcity and high status.
The report also points out that the government of Hong Kong has announced that seven residential sites, capable of providing 4,800 flats, will be available for sale by application in the third quarter.
As of the end of May, the number of homes pending pre-sale consent had risen 11% month on month to 14,526 units, the highest level in eight months, according to the Land Department.
‘Given the increase in supply and uncertainty brought about by Brexit, we maintain our forecast of a 5% to 10% drop in luxury home prices and up to a 10% decline in mass residential prices over the year,’ the report concludes.
Meanwhile, in the commercial sector Grade-A office leasing on Hong Kong Island remained subdued in June. On the supply side, tight availability limited choices in the market, while on the demand side mainland companies slowed their expansion pace in Hong Kong after the previous leasing boom.
The report points out that the Kowloon East office market remained very active, with the key driver being relocation demand from tenants across the harbour. One reported example involved Kingfisher, which moved from Cornwall House in Quarry Bay to KOHO in Kwun Tong.
Over the past few months, a number of co-working space operators have been aggressively expanding in Hong Kong, becoming one of the major sources of demand for office space. For example, WeWork reportedly took up large office space of about 60,000 square feet in Asia Orient Tower in Wan Chai last month. A US co-working space operator reportedly took up four floors, spanning 29,000 square feet in Soundwill Plaza in Causeway Bay.
‘Looking ahead, we expect rents in core business areas to rise 5% during the year, while those in non-core areas could drop 5%. Wong Chuk Hang in Island South, another emerging commercial district, is expected to benefit from the scheduled launch of the new metro line by the end of the year, with increasing office leasing activity and rental levels,’ the report added.