APPD Market Report Article

Hong Kong

February 28, 2022


HKD 38.9


Buying sentiments further cooled off in 4Q21

  • Buying sentiments further cooled off in the quarter, especially in the secondary market. Meanwhile, developers were active in launching new projects, which generally achieved decent sell-through rates. For example, ‘MONACO ONE’ in Kai Tak, developed by Wheelock Properties, sold over 98% of the 491 units launched in two weeks.
  • With tenants generally less active in looking for relocation approaching year-end, leasing activities quietened down. Yet, economic recovery advancement, coupled with the local upgrading demand triggered by the WFH practices continued to support the rental market.

Land supply for 5,680 private units in 1Q22

  • In the luxury residential segment, Occupation Permits for 48 units are expected to be issued in 4Q21. Notable projects include ’16A-16D Shouson Hill Road’ by Joy More Investment (5 units) in Shouson Hill and ‘The Grand Marine’ by Grand Ming Group (5 units) in Tsing Yi.
  • The government has earmarked one residential development site for sale by tender in 1Q22, which is in Tuen Mun and capable of yielding 2,020 flats. Together with the supply from URA, MTRC, private development and redevelopment sources, land supply for private housing for the quarter is estimated to reach 5,680 units.

Luxury rents stabilised as leasing momentum cooled

  • As the traditional peak season has passed, leasing activities slowed down and fewer leasing transactions were recorded. Consequently, luxury residential rental stabilised, edging up 0.2% q-o-q in 4Q21, after rising 1.7% q-o-q in the previous quarter.
  • Luxury capital values extended the recovery by growing 1.4% q-o-q in 4Q21, albeit moderating slightly from the 1.7% recorded in 3Q21, largely attributable to the significant drop in the number of record-breaking transactions during the quarter.

Outlook: Sale velocity to stay low in the luxury segment

  • With the expectation of a mild economic recovery, the buying sentiment for residential is likely to be stable at best. On the positive side, if the border reopening with Mainland China will go ahead during the year, it will likely bring forth added interest and capital which will in turn boost transaction activity. We maintain our forecast for luxury capital values to rise 0-5% in 2022.
  • Similarly, leasing activity is likely to be as stable as it was 2021. Until a more permeable border presents, facilitating greater expatriate relocation to Hong Kong, we expect the market will primarily be driven by domestic demand. We maintain our forecast for luxury rental values to rise 0-5% in 2022.

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

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