APPD Market Report Article

Hong Kong

November 29, 2022

Nelson Wong, Executive Director, Hong Kong


HKD 38.5


Demand recovers slower than expected

  • Primary launches achieved varying results, with projects involving lower lump sums achieving higher sell-through rates. ‘NOVO LAND (Phase 1A&1B)’ and ‘ONE INNOVALE BELLEVUE’ achieved over 95% sell-through rates for their launched units. Meanwhile, a project in Kai Tak, ‘Miami Quay’, only sold 41 of 276 units in the first two rounds.
  • Although the recent relaxation of mortgage stress test requirements has helped to restore homebuyer sentiments somewhat, concerns about rate hikes loom large. The average monthly secondary transaction volume fell by 33% q-o-q, while several popular housing estates recorded transaction prices at three-year lows.

Private housing land supply to meet target

  • Capable of yielding a total of 2,500 units, three residential sites in Kai Tak, Stanley and Kennedy Town will be sold in the third quarter of FY2022-23. Together with supply from URA, MTRC, as well as private development and redevelopment sources, land supply in the first three quarters is expected to provide 11,900 units, exceeding 90% of the government’s annual target.
  • In the luxury residential segment, occupation permits for 157 units are expected to be issued in 3Q22. Notable projects include ’21 Borrett (Phase2)’ by CK Assets (50 units) in the Mid-Levels.

Transactions in the luxury market remain sparse

  • Market sentiment was dampened in the leasing market, with leasing deals on luxury units decreasing by an estimated 6.5% q-o-q in 3Q22. Despite the outflow of expatriates, the rental market for luxury units only recorded a slight drop in 3Q22, following a 1.0% rebound in the previous quarter. Luxury rental values dropped by -0.2% q-o-q, and -1.0% YTD.
  • CK Assets announced the sale of remaining units in its Borrett Road project to a fund for more than HKD 20 billion. Transactions were few elsewhere. Two detached houses, at ’90 Repulse Bay Road’ and ’15 Shouson’, were sold for HKD 410 million and HKD 435 million respectively. Luxury capital values dropped by -0.9% q-o-q in 3Q22, after rising by 1.2% in 2Q22.

Outlook: Downward trend to extend to 1H23

  • Investment demand is anticipated to remain sluggish due to the persisting rate hike environment. The appreciation of the Hong Kong dollar potentially further diminishes the appeal of HKD-based assets. However, the expected lifting of travel restrictions and the possibility of dialing back counter-cyclical measures should give support to price levels.
  • The luxury rental market is expected to see a a rebound in the later part of 2023, thanks to a slowing population net outflow and recovering economic activity levels. The forecast for luxury rental values to decline by 0%-5% remains unchanged.

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

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