Luxury homes to account for only 2.2% of units to be completed until 2021

Capital appreciation potential will be higher for luxury flats.

Upcoming luxury residential projects could present attractive buying opportunities, given their rareness in the market, according to JLL’s latest Hong Kong Residential Sales Market report.

Henry Mok, regional director of capital markets at JLL, said: “In recent months, market focus has largely been concentrated on the mass residential segment where the supply of smaller units could help meet pent-up demand. Still, the luxury market is also expected to be sought after by investors. Over the next few years, luxury units (over 1,722 sq ft, or Class E units per Rating and Valuation Department’s definition) will likely account for just 2.2% of the 100,000 units to be completed between 2017 and 2021. About 70% of the supply will be concentrated in Kowloon and New Territories while about 600 units will be in Hong Kong Island.”

“Luxury units are known for their resilience during a down-cycle. The price appreciation potential is higher for luxury units, with a long-term price CAGR of 9%, compared to 7% for the mass residential segment,” said Ingrid Cheh, associate director of research at JLL.

Some major luxury apartment projects soon to be launched in the sales market include “21 Borrett Road” in Mid-levels and “8-12 Deep Water Bay Drive” in Island South. Meanwhile, the smaller-scale project “16-18 Bonham Road” in Mid-levels West could also offer attractive options to buyers.

JLL figures show that as of August 2017, the JLL Mass Residential Capital Value Index has increased by 0.4% m-o-m and 11.5% in the year-to-date, on track to reach up to 15% growth for the full year. Luxury residential capital values should follow a similar trend, up 10-15% in 2017.