Posh home sales to rise as China's ultra-rich boost demand

Demand for luxury properties may manifest in New Territories and Tung Chung.

Amongst the different segments of Hong Kong’s residential market, luxury properties are expected to benefit the most from the Greater Bay Area (GBA) initiative, as buyers with cash to burn have largely disregarded the higher stamp duties levied on non-local residents and continued to enter the property ladder, according to a report by JLL.

As the GBA develops, and is expected to be fully functioning as an integrated economic region by 2035, the rise in commercial and economic activity is likely to fuel the growth of ultra-high-net-worth individuals (UHNWIs) in China, especially southern China, bringing further demand for luxury properties.

In 2018, the number of high-net worth individuals (HNWI) in Hong Kong with a net worth of US$30m hit 391,569, according to a report from wealth consultancy Wealth-X.

“Over the longer term, residential areas that are closer to the border or transport links will likely benefit from the easing of cross-border movements,” Denis Ma, head of research at JLL Hong Kong, noted in the report. “As more Hong Kong residents seek to commute to work within the GBA on a daily basis, we expect demand for residential properties in these areas to increase significantly.”

The development of Shenzhen’s office market towards the western fringes of the city in areas such as Nanshan and Qianhai/Houhai, along with the potential development of the Hong Kong-Shenzhen Western Express Line (WEL), may also ultimately spur more demand for housing in the city’s Northwest New Territories and Tung Chung.

Also read: Tung Chung set to rise amidst intensified Lantau infrastructure drive

“Historically, the development of new transport infrastructure has typically led to housing prices in these areas outperforming the overall market,” Ma explained, adding that the improvement in accessibility, especially with new railway infrastructure, generally translates into stronger demand for housing in the areas in question as well as increased affluence, although the latter may take more time to materialise.

As a result, properties in areas around the Hong Kong West Kowloon Station for the Guangzhou-Shenzhen-Hong Kong Express Rail Link (XRL) are likely to experience increased demand from those who live and work across the border, given the reduced commute time between Hong Kong and other cities in southern China when travelling by rail.