RESIDENTIAL PROPERTY | Staff Reporter, Hong Kong

Luxury property market rebounds 0.8% in Q1 after 2020 drop

This followed the luxury residential market’s 8.2% decline last year.

Hong Kong’s luxury residential capital value rebounded 0.8% quarter-on-quarter in the first quarter of 2021 after it dropped 8.2% in 2020, JLL has reported.

Luxury rents, meanwhile, remained “largely flat” as it saw a mild drop of 0.2% QoQ. Despite, JLL noted the residential both recorded the “best performance” since the second quarter of 2019.

Transactions during the quarter involved a total of 42 properties priced over $100m, which was 31% higher than the quarterly average in 2020. Total consideration was also 55% higher than last year.

“While we are seeing signs of improved buying sentiment in the residential market, we must hold cautious optimism in terms of how quickly the luxury residential segment will recover, as sales velocity remains slow,” Nelson Wong, Head of Research at JLL in Greater China, said.

He noted the market could still be tempered by the potential imposition of vacancy tax, expected to push developers to launch high-end inventory units and exert price pressure.

Moreover, JLL noted senior executives of mainland Chinese corporates have been active in the luxury market. Amongst the deals, the most notable was the purchase of a house on 77/79 Peak Road for $598m in February.

“Market sentiment continues to climb upward, with March recording an 108.3% m-o-m increase in residential transactions of properties over $50m,” Norry Lee, Senior Director of Projects Strategy and Consultancy Department at JLL in Hong Kong, said.

“As more mainland Chinese firms list and set up business in Hong Kong, we foresee employees of such mainland Chinese corporates forming a solid source of demand, which will continue to grow as they attain Hong Kong residency status over time.”

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