Border reopening bodes well for investment sentiment in residential market

A potential influx of professionals from Mainland China could boost buyer profiles for the luxury market.

Border reopening bodes well for investment sentiments in Hong Kong’s residential market, Savills reported. 

In 2022, the proportion of buyers from Mainland China of luxury properties valued over HK$100m on the Peak, Mid-Levels, and Southside reached a new low at 29%, the lowest level since 2016. 

The total number of deals also declined substantially to 34, of which 10 were made by Mainland buyers

“Luxury volumes continued to shrink in Q4 across most price brackets to record 59 deals, a further 20% drop compared to the previous quarter,” the report also read. 

“The few high-profile deals, however, supported volumes in the HK$200m+ bracket with a 40% QoQ rebound.”

Read more: Residential transaction volume to rebound in H1 2023

Savills noted that a reopening of borders could improve sentiments and that a potential influx of professionals and middle management from Mainland will likely boost buyer profiles of luxury apartments. 

Savills however expect the negative impact of the increase in mortgage rates to offset this. 

“Based on the assumption that the negative impact of higher mortgage rates and Hong Kong/China economic uncertainties on the luxury sector are likely to outweigh the benefits of border reopening during most of 2023, we, therefore, anticipate townhouse prices to adjust downwards by another 5% to 10% in 2023 before more Mainland HNW capital returns to the local market for luxury homes towards the end of 2023,” the report read. 

Luxury apartments meanwhile may perform slightly better posting a 5% decline as more Mainland professionals aim to settle in Hong Kong and buy new homes.