The latest record-setting land sales in the Kai Tai development area are clear signs of developers’ confidence in the future of Hong Kong’s real estate market. On 7 May, a residential plot with GFA of 641,168 sq ft at Hong Kong’s former Kai Tak Airport was sold to a consortium of six developers for a record HK$12.6 billion. And on 15 May, the first seafront commercial plot on the former runway with GFA of 863,000 sq ft was sold for a record land price of HK$11.1 billion.
These major investments by developers show their confidence in a continued increase in Hong Kong’s property prices. This is also consistent with the rebound in housing prices, as property market sentiment has been strong with good sales in new projects.
However, the recent escalation in the China-US trade dispute may cause some developers to be more cautious and adopt a wait-and-see approach, especially for commercial property development, which is capital intensive and has a longer payback period. From a long-term perspective, owing to limited land supply in Hong Kong, land plots with superior locations offering a full view of Victoria Harbour are highly sought after. Knight Frank expects the record-high land prices in the Kai Tak area to boost market confidence and stimulate buyer sentiment, which will continue to fuel a surge in property prices citywide.
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Hong Kong ranks one of the world’s top magnets for private wealth in terms of attracting cross border and domestic private capital investment, just after New York and London. It is also one of the top choices to live for the super wealthy according to the Knight Frank City Wealth Index, which measures the attractiveness of cities in terms of wealth growth, investment opportunities, and lifestyle.
These top rankings for Hong Kong
The Hong Kong market experienced a transaction volume and pricing cool in the second half of 2018. This was due in part to external headwinds from a slowed Chinese economy to an unstable Sino-US trade relationship. Despite this, Knight Frank expects the super luxury residential market to remain resilient compared to the mass market. Historically, the luxury market is proven to be less impacted by short term ups and downs in the economy and sentiments.
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About Piers Brunner
Piers Brunner is the Chief Executive Officer for Greater China at Knight Frank, one of the world’s leading independent property advisors on commercial and residential markets. Based in Hong Kong and a veteran in the real estate industry with almost 30 years of experience, Piers has a wealth of experience in tenant representation – one of the most crucial growth areas for Knight Frank’s Greater China business.