New homes in Hong Kong driving the market forward as developers offer deals
Demand for new mass residential units are the key driver of Hong Kong’s residential market at present with sales of other homes slowing, according to the latest monthly research report.
Developers are continuing to launch new build projects with sweeteners and this means that sellers of other properties who can’t offer such a package are seeing demand slow, says the report from Knight Frank.
With several new projects having launched last month, 7,792 homes were sold in July, an increase of 95.5% year on year. The uptick continued in early August, as evidenced at Le Riviera in Shau Kei Wan, which reportedly sold 21 of its first batch of 30 units on the first day of launch.
On the contrary, sentiment in the re-sales market was subdued, due to the limited supply of small homes and sellers standing firm on prices. End users and home upgraders turned their focus to new projects being launched with sweeteners, particularly in the New Territories.
For example, Mont Vert I in Tai Po, launched by Cheung Kong, reportedly sold 140 of its second batch of 246 units on the first Saturday of August. In the luxury residential market, several major transactions were recorded in July, including the sale of the third flat at Opus in Mid-Levels East for HK$430 million.
Overall luxury residential prices recorded a marginal increase of 0.4% month on month, but the market remained inactive, due to the government’s various cooling measures and an uncertain external economy, the report explains.
It also reveals that leasing demand for luxury homes slightly improved towards the end of the second quarter, with expat families seeking homes prior to the start of the new school year. However, due to multinational companies’ tighter housing budgets and a shift to personal leases, there was no notable rental growth as what we saw in such peak seasons in previous years.
In July, the average rental remained stable at HK$41 per square foot per month and Knight Frank expects them to remain stable for the rest of 2014 amid an uncertain external economy.
In the mass residential leasing market, as overseas students flooded in searching for accommodation, the market entered a traditional peak season. Strong demand, mainly from mainland students, drove rents up 5% to 10% at properties near campuses in Sha Tin, Fanling, Hung Hom and Sai Ying Pun.
For example, a three bedroom, 650 square foot flat at Whampoa Estate in Hung Hom was reportedly leased for HK$18,000 per month or HK$40.7 per square foot, a record high for the development.
‘Despite the rising supply of primary homes, mass home prices have held up recently due to sustained demand from local end users and home upgraders. We forecast mass home prices will remain stable or only fall slightly by less than 5% in 2014,’ the report concludes.