Residential property sales in Hong Kong up after pause for New Year festival period
Residential sales volume in Hong Kong rebounded in February, with both sellers and buyers returning to the market after the Lunar New Year festival, particularly in the primary market, the latest research shows.
Overall sales rebounded 24% and more new flats were launched during the month, with developers offering various sweeteners to offset the impact of the stamp duty rise, according to the Hong Kong monthly review from international real estate firm Knight Frank.
It says that the secondary market remained relatively quiet, resulting in stable home prices during the month while the luxury residential market remained active. Mount Nicholson on the Peak, for instance, sold two houses for over HK$70,000 per square foot last month.
The land market also remained robust. One residential site in Ap Lei Chau and another in Wong Chuk Hang were snapped up by mainland developers. The former was the most expensive residential land ever sold by the government.
Knight Frank also pointed out that the recent Budget echoed the Government’s determination to increase housing supply in the coming decade. ‘While abundant supply will suppress price growth, high land prices and strong housing demand will lend support to prices, which are expected to rise a mild 5% in 2017,’ the report says.
Meanwhile in the commercial property market there were a number of major leasing transactions involving relocation from Central to Quarry Bay in recent weeks. For example, BNP and Freshfield have confirmed to relocate from Exchange Square to One Island East.
The report explains that even though some firms are moving out, Central’s office rents continued to approach record highs. ‘With the tight availability, space released by these relocated firms are quickly taken up, in particularly by Chinese companies which prefer Central for office set up,’ the report explains.
‘We expect Central rents to continue outperforming the market and increase 5% to 7% in 2017, it adds.
In Kowloon the leasing market became active after the Chinese New Year with a number of transactions involving relocations. For example, a sourcing company relocated to an entire floor of 17,000 square feet at Enterprise Square Five.
Kowloon East, where demand is driven by cost saving motives, saw stronger demand for revitalised space with more affordable rents, resulting in a narrowing rental gap between revitalised space and their higher grade counterparts.
‘This trend is expected to continue until the market reaches equilibrium to justify the rental difference. Looking ahead, office rents in Kowloon will face downward pressure in the coming year, as abundant supply will prompt landlords to offer more discounts. Nevertheless, leasing activity is expected to remain robust as the decentralisation trend continues,’ the report adds.