Hong Kong, one of the least affordable housing markets in the world, is experiencing a rare downturn, and the impact on the city’s luxurious property market is obvious.
A 1,875 square foot (174 square meter) apartment for sale in the Repulse Bay neighborhood on the southern tip of the island, where some of the most expensive properties in the world are situated, is currently advertised for HK$95,000 ($12,160) per month, 17% less than the rate it was leased for the previous year. A real estate brokerage that is closer to the central business district advertises on its window that it is “confronting the reality” by listing an apartment for HK$30 million after a HK$2 million discount.
Residential, office, retail, and primary and secondary markets are all affected by the slowdown in Hong Kong’s real estate market. Although there are many high net worth individuals who live in the financial center, the top end of the market has not been spared. According to real estate organizations, there are fewer transactions on the market, prices for sales and rentals are dropping, and there are fewer people viewing homes.
According to a price index from Knight Frank, the migration of expats, closed borders with the mainland, interest rate increases, and an unsteady global macroeconomic climate have all contributed to the decrease of luxury home prices to a 15-month low. High-end home values are predicted by Savills Plc to fall further five to ten percent by 2023. According to Centaline Property, only 1,800 luxury properties will be sold in the year 2022, the lowest in nine years.
Why Hong Kong Property Market Is In A Slump
The recession in Hong Kong’s property market has an impact on all sectors of the economy, including residential, office, retail, primary, and secondary markets. Even though the financial hub is home to many high net worth individuals, the top end of the market has not been spared. Real estate associations claim that there are fewer transactions taking place on the market, prices for purchases and rents are falling, and fewer people are looking at houses.
Expatriate movement, tight borders with the mainland, interest rate increases, and an unsettled global macroeconomic environment, according to a price index from Knight Frank, have all contributed to the drop in luxury home prices to a 15-month low. According to Savills Plc, high-end home values would decrease by another five to ten percent.
Countries Outside Hong Kong Property Market
Outside of Hong Kong, international buyers are driving up prices in other major cities. American buyers of opulent London houses have profited from the cheap pound. Along with a general real estate boom in the city-state, wealthy Chinese buyers are driving up prices in Singapore.
Looking at Southeast Asia property markets such as Thailand. During the last quarter of 2022, the sales of properties is showing signs of increasing as investors and tourists can enter the country freely. However the wait of Chinese homebuyers is still the main point in boasting the property sector in Thailand again. It is not only in Bangkok, but it is also in Pattaya City as well, where pet-friendly condos sales are increasing by young homebuyers in Thailand and from Japan.
What To Expect of Hong Kong Property in 2023.
In Hong Kong, developers and landlords also have very significant holding power, which allows them to wait it out if a listing’s price is too low. V Group’s luxury serviced apartment project at Causeway Bay’s popular shopping district has not sold any of its 64 completely furnished flats because offers have fallen short of expectations. According to Chan, the corporation has no plans to reduce its price.
Chan anticipates a V-shaped recovery after the Covid limitations on the mainland are loosened, citing pent-up demand, particularly from wealthy mainlanders who would typically buy real estate in Hong Kong.
Chan stated that V Group will “purchase aggressively” if prices continue to decline. I never take a stand against Hong Kong, she admitted. As in all countries, real estate investments are all about timing.
Source: Bloomberg.com
