Hong Kong’s luxury homes market shows signs of life as waves of price discounts entice some bottom fishing

Hong Kong’s luxury home segment which has been hit by a wave of deep discounts in the backdrop of soaring interest rates and macroeconomic turbulence, has shown early signs of stability as bottom fishing has emerged in one of the world’s priciest real estate market.

The city’s luxury property prices fell by around 8 per cent in 2023, and 15 per cent from the peak in July 2018, according to CBRE. But a total of 173 deals involving units priced at US$10 million or more were recorded last year, a 31 per cent year-on-year increase, according to Knight Frank. Volumes rose 13 per cent year on year to HK$25.5 billion.

A three-storey detached house located at 15 Moorsom, Jardine’s Lookout with an area of about 3,154 sq ft and two parking spaces, has been put up for sale at a 17 per cent discount, according to Savills Hong Kong, who have been appointed property agents for that sale.

The asking price has been lowered to HK$190 million from HK$230 million by the owners, a local business family, according to Thomas See, senior associate director, investment CEO office of Savills.

“The reduction in prices are due to reasons like high interest rate and macroeconomic uncertainties,” See said on Monday, adding that discounted prices are an emerging trend as “buyers will not purchase properties at market price nowadays and they will show more interest to those which are below”.

“We have received more general enquiries from the luxury residential market, as very high-end property prices have been adjusted downward [more],” he said.

Hong Kong luxury home prices to rise as Singapore’s fall next year: Knight Frank

See expects there will be a rebound in transactions in the short term if the government announces policies to boost the property market during the coming budget plan.

Speculations have grown that Paul Chan Mo-po, Hong Kong’s finance chief, could relax property market curbs further during his budget speech on February 28, after Chief Executive John Lee Ka-chiu, the city’s leader, rolled back some curbs in his policy address last year.

Lee halved the homebuyers’ stamp duty for non-permanent residents and for additional properties. The move brought down both these duties to 7.5 per cent from the previous 15 per cent.

Moreover, professionals arriving in the city under different talent recruitment schemes are only required to pay stamp duty on property purchases if they fail to become permanent residents after the statutory seven years have elapsed.

Last month, a mainland Chinese buyer linked to the founder of Mindray Bio-Medical Electronics, snapped up an ultra-luxury house at The Peak in Hong Kong at a 35 per cent discount.

The mansion, 25-26 A&B Lugard Road, sold for HK$838 million (US$107 million), or HK$71,703 per square foot, according to Savills Hong Kong, the sole agent for the property.

Foreclosed luxury properties have also been offered at large discounts. Last week, a penthouse at Kennedy Park At Central in Mid-Levels was sold at a discount of 52 per cent compared to its purchase price 11 years ago.

The property market has seen sentiment cooling during the Lunar New Year as outbound travels increased and as some buyers awaited the forthcoming budget plan.

Only 13 first-hand transactions were recorded during the 5-day holiday period, an eight-year low, while only 4 second-hand transactions were recorded from the 35 housing estates, a 23-year low, according to property agency Midland Realty.

Many unfavourable factors had emerged in the city’s property market, including an increase in the number of homes with negative equity, a high inventory of new flats, fewer transactions and a slump in property prices, he said.