Hong Kong residential property market takes bullish turn attributed to vaccine rollout and increased stimulus spending in the US
In 2020, Hong Kong witnessed a surge in commercial property market demand, and now, the wave is spreading to the residential sector.
Hong Kong’s residential property market is seeing a bullish turn in recent times. An indication of this is being seen in the Kowloon part of the region where homebuyers are unaffected by the COVID-19 scare that has been looming for quite some time.
Sino Land, Wheelock Properties et al.’s joint venture, the Grand Victoria Project, managed to sell all but 25 of their 227 units or 89 per cent of the total available units. The company made nearly HK$2.4 billion (S$416 million) as of 13 March. With nearly 10 people bidding for each unit, the sales offices of these companies in Kowloon’s Tai Kok Tsui were flooded with prospective buyers.
The Grand Victoria saw its prices go as high as HK$25,275 (S$4,378), almost 7 per cent more than Sun Hung Kai Properties’s prevailing market rate. Surprisingly, even a hike in prices failed to dampen the moods of property buyers. Experts attribute this trend to the roll-out of vaccines and increased stimulus spending in the US.
The first phase of Grand Victoria consists of five tower blocks, which is just a five-minute walk from the Nam Cheong Subway Station. This massive project is estimated to have 524 apartments of varied sizes and includes duplex units as well. The handover of houses to the respective buyers is expected to happen in March 2023.
The first 227 units that went on sale over the weekend ranged from 277 square feet to 835 square feet in size. Their prices start in the vicinity of HK$6.35 million (S$1.1 million) and go as high as HK$23.96 million (S$4 million). Other stakeholders who stand to benefit from this wave include Shimao Group, SEA Group, and K. Wah International after jointly investing HK$17.3 billion (S$3 billion) for the development.
According to Bloomberg, this home buying frenzy could be one of the reasons for Hong Kong’s economic recovery. The market might recover from its worst recession in history with a rebound of 4.1 per cent, after declining by 6.1 per cent in 2020.
Moreover, the city government announced a relief package in the form of consumption coupons of HK$5,000 (S$866) to restore the nation’s economy.
While many pundits believe that this is the primary reason for the heightened interest, there are other complementing factors as well. These include the continual low-interest rates on property loans and the wealth effect of the stock market.
This news comes as a relief for real estate developers who plan on adding more residential units to the market. According to reports, Hong Kong might see an increase in the number of residential flats. As a result, the number of housing units could go from 20,000 flats to 36,919 flats by the end of this year.
The boom suggests that the worst may be over for Hong Kong. New World Development’s chief executive Adrian Cheng attributed to the vaccine rollout and the electronic consumption vouchers. In the wake of this trend, the top management official is expecting double-digit sales growth in retail sales by mid-2021.
Another real estate project that seems to be making the waves is the LP10. With over 5,100 people showing their interest in 179 units, there was a near frenzy for the residential homes in the Lohas Park area.
The response has prompted the promoters to release an additional 128 units in the same project. This news comes after the company reported a revenue of HK$1.6 billion (US$206 million) from the second round of sale of the property project.
LP10 is the tenth phase of a mass housing development project that comprises of 893 flats. The first batch of these units that were put up for sale consisted of four and two-bedroom units. These range from 484 square feet to 1,205 square feet (112 square meters) and the rates are pegged at HK$15,888 per square foot on average after offering a discount of 20.5%.
Despite all this, the rising unemployment rate is still a cause for concern in the region. The CEO of Midland Realty, Sammy Po Siu-ming, mentions that it is unlikely to impact property sales in the near future. She attributes it to low unemployment rates in sectors like IT, finance, real estate, which are currently keeping Hong Kong’s real estate buoyant.
With more and more citizens using up their electronic consumption vouchers, the economy and property markets, in particular, seem to be on a path of resuscitation. Only time can tell if this is a pent up demand or a full-fledged recovery.
