Bloomberg reported on November 27 that Hong Kong’s luxury real estate is feeling the impact of the city’s property slump. Additionally, luxury sales have reached a 9-year bottom, with prices falling further.
A price index from Knight Frank has listed some reasons for this tendency. They include an exodus of ex-pats, closed borders with the mainland, interest rate climbs, and an uncertain global macroeconomic environment.
Savills Plc predicts that high-end home values will correct 10% this year and drop another 5% to 10% by 2023.
According to Centaline Property, only 1,800 luxury residences are expected to be sold this year, the lowest in 9 years.
The V Group founder Vivien Chan said, “We are in uncertain and unchartered waters.” The developer’s portfolio focuses on luxury serviced apartments and homes in Hong Kong.
Chan added, “People, I think, will be hesitant to trade up because of the hike in interest rates and the uncertainty of the markets, and of course Hong Kong is not totally out of our quarantine culture.”
Due to the currency peg to the U.S. dollar, interest rates in Hong Kong have increased as the Federal Reserve follows. HSBC Holding Plc has increased its best lending rate from 5% to 5.375%.
Knight Frank’s head of the residential agency and senior director Maggie Lee said, “Some clients have cash on hand, they are ready to buy, but they say ‘okay let’s wait and see, I just want to see whether we can see the end of interest rate hikes or the uncertainty clear.’”