APPD Market Report Article

Hong Kong

December 1, 2021


HKD 38.8


Buying sentiment cools down slightly in 3Q21

  • With home prices approaching the previous peak, buying sentiment cooled down slightly during the quarter as prospective buyers became more cautious. However, sell-through rates were generally high. For example, over 91% of the 1,224 units launched at ‘Wetland Seasons Bay (Phase 1)’ in Tin Shui Wai, developed by Sun Hung Kai Properties, were sold within one month.
  • Leasing activities remained to be supported by the current pool of residents in Hong Kong, given the limited number of expatriate arrivals. Yet, leasing momentum continued to hold up, mainly bolstered by seasonal demand with many existing tenants renewing contracts ahead of the new academic year.

Land supply for 7,110 private units in 4Q21

  • In the luxury residential segment, occupation permits for 90 units are expected to be issued in 3Q21. Notable projects include ’36 Lo Fai Road’ by HKR International and Hysan Development (75 units) in Tai Po and ‘138 Pok Fu Lam Road’ by Ryoden Development (3 units) in Pokfulam.
  • The government has earmarked two residential sites for sale by tender in 4Q21, including one each in Repulse Bay and Tai Po, capable of yielding 210 flats in total. Together with the supply from URA’s Hung Fook Street/Ngan Hon Street development project, and private development and redevelopment sources, land supply for private housing from the quarter is estimated to reach 7,110 units.

Rise in luxury prices moderates amid stock market volatility

  • With the containment of COVID-19 in the city, leasing momentum continued to improve in 3Q21 which is the traditional peak leasing season. Few landlords were willing to offer discounts upon contract renewals. Some even increased rents for new contracts amid strong end-user demand. Consequently, luxury rents further climbed 1.7% q-o-q in 3Q21, after rising 1.4% in the previous quarter.
  • Luxury capital values continued to trend higher, up 1.7% q-o-q in 3Q21, albeit moderating from the 3.1% q-o-q recorded in 2Q21, largely attributable to weaker buying sentiment caused by stock market volatility as well as fewer record-breaking transactions recorded in the quarter.

Outlook: Luxury segment to remain on the upward trend

  • Amid the stock market volatility, recent weakening in buying sentiment is likely to linger into 4Q. On the positive side, demand for luxury properties could be supported if offshore buyers can travel freely to Hong Kong, though timing for more relaxed entry restrictions is highly uncertain. We maintain our forecast for luxury capital values to rise 5-10% in 2021 and 0-5% in 2022.
  • Leasing activity is likely to slow down in 4Q21 as demand was largely fulfilled in the past two quarters. However, the overall rental market should still be supported as the economy and the pandemic situation continue to improve. We maintain our forecast for 2021 rental values to rise by 0-5%.

Note: Hong Kong Residential refers to Hong Kong's overall luxury residential market.

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