With residential prices down by around 10% from their previous peak most vendors still have holding power, which has been reflected in the extremely low delinquency ratios of the past 12 months (averaging 0.03% for over 3 months and 0.01% for over 6 months), suggesting that a wave of distressed sales is unlikely in the short term.
With residential prices down by around 10% from their previous peak most vendors still have holding power, which has been reflected in the extremely low delinquency ratios of the past 12 months (averaging 0.03% for over 3 months and 0.01% for over 6 months), suggesting that a wave of distressed sales is unlikely in the short term.
Looking ahead, ongoing border restrictions and social distancing measures may affect the ability of both Mainland and local wealthies to view trophy assets. While the recent strength in both the stock market and the Hong Kong dollar indicate an influx of capital, the recurring virus outbreak as well as the uncertain political situation may push many luxury buyers to consider overseas properties, even though their current residential holdings in Hong Kong are unlikely to be liquidated.
Investors are currently looking outside Hong Kong to take advantage of favourable exchange rates and /or reductions in duties in overseas markets. As such, very few existing luxury properties are expected to come to market, while new investment into the local market may be hard to come by, suggesting that luxury volumes may fall back to their previous lows over 2H/2020.
Mr. Simon Smith, Senior Director, Research & Consultancy commented: “Luxury sentiment has revived especially in the HK$50-HK$200 million segment where 5% discounts were sufficient to attract buyers but with the virus recurring and the political situation uncertain more luxury buyers may be inclined to look at overseas options for future investment.”
Mr. Patrick Chau, Senior Director, Residential Development and Investment said: “We are hopeful that new luxury and super luxury launches in the second half could boost sentiment, but the timing remains highly uncertain.”
Mr. Keith Chang, Senior Director, Realty Investment said: “The second quarter saw deals being concluded above HK$200 million on Hong Kong Island, while the New Territories appealed to buyers as a low-density lifestyle destination for owner-occupiers.”