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HONG KONG

Capital appreciation potential higher for luxury residential flats

Only 2.2% of the 100,000 units to be completed from now until 2021 are luxury units


HONG KONG, 26 September 2017 – Upcoming luxury residential projects could present attractive buying opportunities, given their rareness in the market, according to JLL's latest Hong Kong Residential Sales Market report released today.​

Henry Mok, regional director of capital markets at JLL, said: "In recent months, market focus has largely been concentrated on the mass residential segment where the supply of smaller units could help meet pent-up demand. Still, the luxury market is also expected to be sought after by investors.  Over the next few years, luxury units (over 1,722 sq ft, or Class E units per Rating and Valuation Department's definition) will likely account for just 2.2% of the 100,000 units to be completed between 2017 and 2021. About 70% of the supply will be concentrated in Kowloon and New Territories while about 600 units will be in Hong Kong Island."​

"Luxury units are known for their resilience during a down-cycle. The price appreciation potential is higher for luxury units, with a long-term price CAGR of 9%, compared to 7% for the mass residential segment," said Ingrid Cheh, associate director of research at JLL. ​

Some major luxury apartment projects soon to be launched in the sales market include "21 Borrett Road" in Mid-levels and "8-12 Deep Water Bay Drive" in Island South. Meanwhile, the smaller-scale project "16-18 Bonham Road" in Mid-levels West could also offer attractive options to buyers.

JLL figures show that as of August 2017, the JLL Mass Residential Capital Value Index has increased by 0.4% m-o-m and 11.5% in the year-to-date, on track to reach up to 15% growth for the full year. Luxury residential capital values should follow a similar trend, up 10-15% in 2017.

 

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