Hong Kong real estate is the second most expensive in the world; Knight Frank estimated it will fall 10% this year.
Hong Kong Wen Wei Po (By Ma Cuimei)
Real estate continues to be one of the investment products pursued by global investors. Property prices around the world have continued to rise. While Hong Kong luxury property prices only rose by 1.8% year-on-year last year, and the ranking fell sharply from the 17th in the world to 47th. Base on property price, local luxury house is still the second most expensive in the world last year, and the Monaco luxury mansion ranks the first. The price of general residential and luxury properties in Hong Kong will fall by 10% this year, while for super luxury property it will fall 5% at the most, the executive director and head of valuation and consulting department of Knight Frank, Lin Haowen predicted.
In the list of the largest increase in luxury property prices last year, the top five all recorded more than 10% increase, but it was far less than the previous year's overall upward trend. The top 10 in the year before last year all were more than 10%, with Guangzhou among had the largest increase in 27.4%. As for the biggest increase in luxury property prices last year, it was from Manila, the capital of the Philippines, with the price of local luxury property rose by 11.1% year-on-year. Followed by the Scottish capital of Edinburgh and the German capital of Berlin, both of which rose by 10.6% and 10.5% respectively. As for Germany's big city Munich, Argentina's capital Buenos Aires tied for the fourth, both rose 10%.
Beijing, Shanghai and Guangzhou rose slow down.
The prices of luxury residential properties in many cities in the Mainland hit the top 100 global rankings in the year before last. Guangzhou luxury property price rose by 27.4% in the year before last, which was the highest in the world, while the increase slowed to 2.3% last year, ranking from the 1st to 39th. Shanghai fell from the 15th in the year before last to the 71st, with increase slowed from 9.2% to 0.1% last year. As for Beijing, it fell slightly from 20th to 25th, and the increase slowed from 6.7% to 4%.
As for Hong Kong, the price of luxury property rose by 7.3% in the year before last, then slowed down to 1.8% last year, however, little increase may due to the high base, because Hong Kong luxury property price is still the second highest in the world. Takes $ 1 million for example (amount to HKD7.85 million ), it is only enough to buy 22 square meters (approximately 236.8 square feet), that is, about one room or open style unit. However, the same money only can buy 16 square meters (about 172.2 sq ft) of the most expensive luxury property in Monaco, which is slightly larger than the standard parking space in Hong Kong.
Billionaires are getting more to support the property prices.
It is expected that the Hong Kong luxury property price will fall by 10% this year, due to factors such as Hong Kong government planed not to withdraw the strict measures and etc., Lin haowen expressed. However, there are still many factors in the market to support the sale of super-luxury properties in Hong Kong, including the tight supply of super-luxury houses, as well as the higher and higher of the property prices, and the expectation that more and more super-rich people will appear in Hong Kong. The turnover of super-luxury properties in Hong Kong will be supported by the effect of supply and demand, especially the transactions around price of HKD 100 million will have the most significant rising.
In respect of the general residential property, Mr Lin also expected that Hong Kong residential property price will fall by 10%, and government measures and Hong Kong economic performance will be the key to the property prices trend. ‘Most of the Hong Kong local home buyers are wage earners. So the property prices will be affected by freezing wages and even layoffs caused by Hong Kong economic growth slow down as the financial statement expected, also external factors including the Sino-US trade war and the Brexit process which may have impact on the Hong Kong stock market.’ he explained.
Lin Haowen expected that the tiny house projects and HOS among the general housing will have the most sharp decline this year, because their early rises were too fast. Regarding the recent failure of bid for the land sites in the Peak and Kai Tak, he believed the main reason was the gap between the developers and the government, and it is believed developers will still interested in these sites if government would lower down the bottom prices in future, also he predicted the land prices to fall by 5-10% this year.
Knight Frank called for alert of the decline among tiny houses.
In addition, the report also mentioned that from the third quarter of the year before last to the third quarter of last year, Hong Kong ranked the global third in terms of attracting cross-border and local private capital investment, but Lin Haowen pointed out that over 90% of the relevant investments were from local or mainland while less than 10% were from foreign investment. Mainland ranked 12th in the relevant rankings, with the cross-border investments accounted for only 16%, mainly due to factors such as imperfect regulations and market opacity, so it is believed mainland needs more effort on increasing market attractiveness, the director and the head of Greater China research and consulting department of Knight Frank, Ji Yanxun added.