By Minjune Kim
Hong Kong is the world’s fifth-most expensive residential real estate market, after Monte Carlo, Moscow, London and Tokyo, according to Global Property Guide.
Hong Kong home prices are up 26 percent this year, erasing losses posted between the Sept. 15, 2008, demise of Lehman Brothers and Dec. 31, 2008, according to the weekly Centa-City Leading Index. Mainland Chinese buyers and record mortgage rates lower than London and New York enabled Hong Kong to recover while the other financial centers struggle.
Hong Kong property recovered faster because its banks are healthy and residents save money, said Khiem Do, head of the multi-asset group at Baring Asset Management (Asia) Ltd., which holds $7 billion in assets, including shares of Hong Kong and China developers.
In another demonstration of how the recession is shaking up the global financial order, two luxury Hong Kong apartments have just gone on the market for a stunning $38.7 million each. If the developer, Sun Hung Kai, finds buyers at that price, the three-level penthouse dwellings, perched atop the 93-storey Cullinan towers with sweeping views of Hong Kong's harbor, could well qualify as the world's most expensive apartments. More than 4,000 sq. ft. in size, the apartments, which are still under construction, are selling for $9,677 per sq. ft. That's considerably above the $6,000-per-sq.-ft. price that top-end London flats were fetching in early 2007, when that city was reputed to be the world's priciest housing market.
With the boom in Hong Kong's property market, luxury apartments in the once-unglamorous Kowloon district have suddenly become some of the most expensive properties on the planet, thanks in part to strong interest from mainland Chinese investors.
Peter Churchouse, a director at a Hong Kong investment research and advisory firm, says he doesn't think Hong Kong's housing market is a bubble. But some analysts worry that low interest rates, high liquidity and a tight supply of new apartments could fuel irrational exuberance. Churchouse says: "I could easily see this market developing into a bubble, but it's not a bubble yet." That should be of some comfort for the buyer who just paid $3.16 million for a 590 sq. ft. apartment.