One of the World’s Most Expensive Luxury Property Markets Is Becoming a Lot Cheaper
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One of the World’s Most Expensive Luxury Property Markets Is Becoming a Lot Cheaper

Hong Kong’s superluxury homes have lost more than a quarter of their value. Prices haven’t hit the bottom yet.

By ELAINE YU
Tue, Feb 20, 2024 8:37amGrey Clock 3 min

China’s economic slowdown is wreaking havoc on Hong Kong’s luxury property market .

The most expensive homes in the city are changing hands at steep discounts to what they were worth just a few years ago. Chinese property tycoons, struggling to contain the fallout of their collapsing business empires, have become forced sellers. Bank lenders are seizing properties after luxury homeowners miss loan payments.

The average selling price of superluxury homes, defined as those worth more than the equivalent of $38 million, has fallen by more than a quarter since the middle of 2022, said Cherrie Lai, senior director and head of residential sales in Hong Kong at Savills . It will fall further this year as sellers accept reduced prices to cash out quickly, she said.

The slide in prices shows the fallout of China’s sputtering economy, which is suffering from deflation , slowing exports and moribund consumer confidence. A continuing real-estate slowdown in China is proving particularly painful, since the country’s big-spending property magnates were behind some of Hong Kong’s biggest luxury-property deals in recent years.

Hong Kong’s property market has also been squeezed by rising interest rates in the U.S. The Hong Kong dollar is pegged to the U.S. dollar, and the city’s de facto central bank matches Federal Reserve interest-rate increases. But the U.S. market has held up much better: Nine-figure home sales in places such as California and Florida have skyrocketed , and luxury-home prices in the top 5% of the U.S. market have soared over the past decade.

The luxury homes up for grabs in Hong Kong include three mansions linked to collapsed real-estate company   China Evergrande , said Victoria Allan, founder of Habitat Property. Local media reported they were ultimately owned by Hui Ka Yan , the company’s founder.

The three properties, which are adjacent mansions on a hillside road known as Black’s Link, have been seized by creditors. House 10B was sold for about $115 million in 2019 but it is now valued by banks at roughly $55 million, said Allan. It has yet to find a buyer. The other two properties could be put on the market next month, she said.

Chen Hongtian, the mainland-Chinese founder of property-investment firm Cheung Kei Group, bought a luxury high-rise apartment occupying an entire floor in a building designed by architect Frank Gehry in 2015, paying about $49.5 million. It was later seized by a creditor, according to official records. In September, shipping magnate Kwai Sze Hoi bought the property for $53.4 million, records show, below what property agents said was a market valuation of about $87 million at the time.

Homes seized by creditors usually sell at a discount to market prices, property agents say.

A waterfront house at Residence Bel-Air, a luxury residential development, belonged to Mai Fan , the chief executive of Kaisa Group —another developer that defaulted as China’s property crisis widened in recent years. He acquired the house through a company called Million Link Development in 2017, corporate and land records show, at a time when property prices were still climbing. Receivers were appointed to handle the property in 2021 and sold the house the following year for about $46 million, according to the land registry.

In one of Hong Kong’s top sales in recent years, a local businessman sold his house for the equivalent of about $107 million last month, well below the initial asking price of $166 million, according to Savills. It is located on Hong Kong’s Victoria Peak, a mountaintop neighborhood that is home to business moguls and celebrities living in some of the city’s most expensive properties.

“China still has very wealthy people, but they’re a different group now,” said Victor Cheng, a realtor in Hong Kong. “They’re not the highflying property moguls but those who may not have made as much when China grew rapidly but whose businesses grew steadily.”

He said the new breed of luxury-home buyer in Hong Kong is cash-rich and less likely to load up on debt.

Some mainland Chinese homeowners have been forced or pressured to sell—often at around 20% below market prices—because they need cash to pay off debt, said Cheng. Some top executives from the mainland previously bought trophy homes and only used them occasionally without renting them out, he said.

Data analysed by online real-estate marketplace Spacious.hk suggest a tougher time ahead for luxury homes. The number of sale inquiries on the platform for homes priced at the equivalent of $10 million or above fell 45% in the past 12 months, said Spacious.hk Chief Operating Officer James Fisher. Inquiries for homes under $1.3 million and for those priced between that and $3.2 million fell by 8% and 25%, respectively.

The price index for private homes slumped to a seven-year low by the end of 2023, according to Hong Kong’s Rating and Valuation Department.



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We reveal the No. 1 areas for price growth in each capital city

By Bronwyn Allen
Thu, Jul 18, 2024 3 min

Home values across Australia rose by a median 8 percent in FY24, delivering the equivalent of $59,000 in new capital growth to the two-thirds of the population that owns a home, according to CoreLogic data. Investors received total returns of 12.2 percent over the year, including capital gains and gross rental income.

Very tight supply and demand in most capital cities except Melbourne and Hobart was a significant driver of the capital growth, with the smaller and more affordable capital cities of Perth, Brisbane and Adelaide experiencing the most price appreciation over the year. A lack of properties for sale trumped the usual dampening effect of higher interest rates.

As usual, some areas outperformed their city’s median growth benchmark. Here are the top SA3 areas for capital growth in each capital city of Australia in FY24. SA3 areas are large suburbs, or districts incorporating clusters of suburbs, with more than 20,000 residents.

 

Sydney

Home values across Sydney rose by a median 6.3 percent in FY24. The No. 1 area for growth was Mount Druitt. Its median value rose by 13.96 percent to $859,939. Mount Druitt is located 33km west of the CBD. It incorporates the suburbs of Mount Druitt, Ropes Crossing, Whalan and Minchinbury. The Mount Druitt community is very multicultural with almost one in two residents born overseas. It is home to many young families, with the median age of residents being 33 compared to the NSW median of 39.

 

Melbourne

Home values across Melbourne rose by a median 1.3 percent in FY24. The top area for capital growth was Moreland-North with 4.71 percent growth. This took the district’s median home value to $746,488. Moreland-North includes the suburbs of Hadfield, Pascoe Vale and Glenroy. It’s a multicultural community with a particularly large contingent of residents with Italian ancestry. One or both parents of 66 percent of residents were born overseas, according to the 2021 Census.

 

Brisbane

Home values across Brisbane rose by a median 15.8 percent in FY24. The No. 1 area for growth was Springwood-Kingston in Logan City. Its median value swelled by 25.55 percent to $710,569. Springwood-Kingston is approximately 22km south of Brisbane CBD. It incorporates the suburbs of Springwood, Kingston, Rochedale South and Slacks Creek. It is a multicultural community with one or both parents of 55 percent of the residents born overseas, according to the 2021 Census. More than 15 percent of residents have Irish or Scottish ancestry.

 

Adelaide

Home values across Adelaide rose by a median 15.4 percent in FY24. The best area for capital growth was Playford in Playford City. Its median value soared by 19.94 percent to $530,991. Playford is approximately 40km north of Adelaide. It incorporates the suburbs of Elizabeth Downs, Elizabeth Grove, Angle Vale and Virginia. It is home to many young people under the age of 40. The median age of residents is 33 compared to the state median of 41.

 

Perth 

Home values across Perth rose by a median 23.6 percent in FY24. The No. 1 area for growth was Kwinana in Kwinana City. Its median value skyrocketed by 33.19 percent to $618,925. Kwinana is approximately 37km south of Perth CBD. It includes the suburbs of Leda, Medina, Casuarina and Mandogalup. Henderson Naval Base is located here and there is a significant community of servicemen and ex-servicemen living in the area. It is home to many young families, with the median age of residents being 33 compared to the state median of 38.

 

Canberra

Home values across the nation’s capital rose by a median 2.2 percent in FY24. The best area for capital growth was Weston Creek. Its median value rose by 5.24 percent to $937,740. Weston Creek is approximately 13km south-west of the CBD. It includes the suburbs of Weston Creek, Holder, Duffy, Fisher and Chapman. Approximately 43 percent of residents have a bachelor’s degree, which is on par with the ACT median but much higher than the national median of 26 percent. Household incomes are about 35 percent higher than the national median. Almost one in five residents work in government administration jobs.

 

Hobart

Home values across Hobart fell 0.1 percent in FY24. The top performing area for capital gains was Sorell-Dodges Ferry with 2.78 percent growth. This took the area’s median home value to $615,973. Sorell-Dodges Ferry is approximately 25km north-west of Hobart. It incorporates the suburbs of Richmond, Sorell, Dodges Ferry, Carlton and Primrose Sands. The area has a large community of baby boomers and retirees, with the median age of residents being 43 compared to the Australian median of 38.

 

Darwin

Home values across Darwin rose by a median 2.4 percent in FY24. The No. 1 area for growth was Litchfield. Its median value moved 3.21 higher to $672,003. Litchfield is about 37km south-east of Darwin and includes the suburbs of Humpty Doo, Acacia Hills and Southport.  It has a high proportion of middle-aged residents, with the median age being 39 compared to the territory median of 33. About 12 percent of residents are Indigenous Australians. The biggest industries are government administration and defence. Median household incomes are about 35 percent higher than the national median.

 

MOST POPULAR
11 ACRES ROAD, KELLYVILLE, NSW

This stylish family home combines a classic palette and finishes with a flexible floorplan

35 North Street Windsor

Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.

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