The luxury real estate market in Hong Kong faces significant challenges ahead, as indicated by data from Spacious.hk. Inquiries for homes priced at $10 million or more have dropped by 45% over the past year, reflecting a broader trend of declining interest in high-end properties. Meanwhile, inquiries for homes priced below $1.3 million and those between $1.3 million and $3.2 million also saw notable decreases. The price index for private homes hit a seven-year low by the end of 2023, underscoring the subdued state of the housing market in Hong Kong amidst economic uncertainties and shifting buyer preferences.
In recent years, the most extravagant homes in Hong Kong have been selling at significant discounts compared to their previous values. Chinese real estate moguls, grappling with the fallout from their failing business ventures, are being forced to offload their properties. Banks step in to take over when affluent homeowners default on their loans.
Cherrie Lai, senior director and head of residential sales at Savills in Hong Kong, reports that the average selling price of ultra-luxury homes, valued at over $38 million, has dropped by more than 25% since mid-2022. Further declines are predicted as sellers opt for lower prices to quickly liquidate their assets.
The decline in prices mirrors China’s sluggish economy, marked by deflation, decreasing exports, and stagnant consumer confidence. The ongoing slowdown in China’s real estate sector is particularly concerning given the country’s penchant for lavish property investments.
Hong Kong's real estate market faces pressure from increasing interest rates in the United States, as the city's dollar is tied to the US dollar. However, the US market remains relatively robust, with high-value property sales, including those exceeding nine figures in places like California and Florida, experiencing surges.
In Hong Kong, luxury residences up for purchase include three mansions linked to the collapsed real estate giant China Evergrande, previously owned by the company’s founder, Hui Ka Yan. These properties, repossessed by creditors, are now being sold at discounted rates.
Cheung Kei Group’s founder, Chen Hongtian, had purchased a luxurious high-rise apartment in 2015 but later faced its seizure by a creditor. Similarly, a waterfront house at Residence Bel-Air, previously owned by Mai Fan, was sold at a discount after being seized by receivers.
In a notable sale recently, a local businessman purchased a property on Victoria Peak for significantly less than its initial valuation. This trend reflects the changing landscape of luxury home buyers in Hong Kong, who are now characterized by ample cash reserves and a tendency to avoid excessive debt.
According to realtor Victor Cheng, mainland Chinese homeowners facing financial pressures are selling their properties at around 20% below market value. Data from Spacious.hk indicates a challenging period ahead for luxury residences, with a significant drop in inquiries for high-priced homes over the past year.
By the end of 2023, the price index for private homes had reached its lowest point in seven years, as reported by the Hong Kong Rating and Valuation Department. These trends underscore the shifting dynamics of the luxury real estate market in Hong Kong amidst economic uncertainties and changing buyer demographics.
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