• Strong primary sales compensated for the subdued secondary market
• The super luxury segment was sluggish with both Mainland and local HNWIs holding back
• The return of Mainland developers could lead to more aggressive bidding for larger and more prime residential sites
Hong Kong – 14 Jul 2019 Prominent real estate advisor Savills reported that the overall Hong Kong residential market recorded 21,685 transactions in the first four months of 2019, flat compared with the same period last year. Both luxury and mass residential markets were supported by the primary market, as its market share of total volume increased from 22.4% in Q1 to 37.4% in Q2. The super luxury segment saw a fall in demand and the townhouse market recorded a 1.5% price adjustment over Q2.
On Hong Kong Island, though the luxury apartment transaction volume fell substantially by 24.8% YoY over the first half of the year, as many potential purchasers looked for bargains in the secondary market but few landlords were prepared to entertain (secondary transaction volumes -29.1% in 1H 2019), prices increased by 3.6% in Q2/2019 and 5.6% over the first half of the year.
The Kowloon / NT luxury market saw transactions rebounding in 1H/2019 thanks to aggressive primary launches, with overall and primary transaction volumes both rebounding by 1.6% and 10.8% YoY respectively, led by sales of primary units in Shatin / Tai Po (103 units), Tuen Mun (92 units) and Ho Man Tin (78 units). As a result, Kowloon and NT luxury residential prices increased by 0.9% and 2.3% respectively over Q2/2019.
Mr. Simon Smith, Senior Director, Research & Consultancy commented: “The super luxury segment saw some price adjustment with both Mainland and local HNWIs sitting on the sidelines. Elsewhere, buyers were looking for bargains given the uncertain economic environment but very few landlords were prepared to entertain.”
Mr. Keith Chang, Managing Director, Savills Realty Limited said: “With local GDP growing at a much more moderate pace of 0.1% YoY in Q1/2019, together with uncertainties over the US / China trade negotiations and the direction of the local stock market, residential demand may pull back over the next three to six months, especially at the top end where asset allocation among cities is most mobile. The mass market may still be driven by primary sales.”
Ms. Edina Wong, Senior Director, Residential Services said: “The mass sentiment was mostly affected by external uncertainties, particularly the impact of the trade war on local job prospects. And the proposed Extradition Bill, though retracted, may have also pushed some high net worth’s to at least rethink their asset allocation strategy within Asia.”
Mr. Patrick Chau, Senior Director, Residential Development & Investment added: “The latest sale of the Kai Tak residential site for a price ‘below market expectations’ may indicate that developers are turning cautious on future residential prospects, but the return of Mainland developers could lead to more aggressive bidding for larger and more prime residential sites.”