Moving to Hong Kong? Though it’s difficult for foreigners to buy within the city, the market has never been hotter

By FREDERIK BALFOUR 

For the eighth year in a row, Hong Kong holds the dubious distinction of being the world’s least affordable city in which to buy a home. And yet, as locals clamour to get a foothold on the property ladder and wealthy Chinese seeking an offshore haven keep buying into the top end of the market, demand for real estate continues to rise.

Prices of homes in the secondary market rose 14.4% in 2017 and could climb as much as 20% this year if the stock market keeps roaring, said Denis Ma, head of Hong Kong research at consulting firm Jones Lang LaSalle Inc.

In November, a four-bedroom house at the Mount Nicholson development in the city’s Peak neighbourhood sold for about US$148 million (RM585.78 million), or US$16,211 per sq ft, a record sum in Asia. The 9,178-sq-ft (852.66 sq m) property has an elevator, pool, garden and unobstructed views of Hong Kong and Victoria Harbour.

For most foreigners, buying isn’t an option because of a 30% tax levied on purchases by non-permanent residents as part of the government’s attempt to rein in prices. Overseas hopefuls must live in the city for seven years to satisfy the residency requirement; the stamp duty levied on home purchases for locals is a much lower 4.25%.

Renting at the Peak

Even renters accustomed to high prices should brace for serious sticker shock. “If you bring your family from London or Sydney, you are going to have to accept a different reality,” said Steven McCrindle, partner in charge of Hong Kong at executive search company Heidrick & Struggles International Inc. “You will probably end up paying three to four times more in rent than what you are used to in your home country.”

Nowhere is this more apparent than on the Peak, the highest point on Hong Kong Island, which comes with cooling maritime breezes and city views. Sun Hung Kai Properties Ltd recently rented a 3,537-sq-ft, three-storey, five- bedroom villa complete with a pool and an elevator for US$57,725 per month.

Less lofty, but immensely popular, are apartments in Mid-Levels. Perched on the city’s steep slopes, these high-rises are only minutes from downtown but also have access to nearby nature trails. Prices range from US$18,855 per month for a 1,741-sq-ft three- bedroom on the 30th floor at Kerry Properties Ltd’s Branksome Crest to US$23,000 for a 2,200-sq-ft duplex at Sun Hung Kai’s Dynasty Court.

Escaping the City

For those preferring a nostalgic taste of the colonial era, the height of elegance is to rent a Kadoorie Estates Ltd villa in Kowloon. The neighbourhood is in such demand that on average only one of its 86 houses becomes vacant each year, said GM Raymond Ho. This year’s property, a 3,000-sq-ft house with a walled garden, just rented for US$31,950 a month.

A more vacation vibe awaits those who rent at the 1,604-acre (649.12ha) resort-style project called Discovery Bay on Lantau Island, which is also home to Hong Kong Disneyland.

The project, a 25-minute ferry ride into the city, was built by HKR International Ltd and has a 27-hole golf course, an international school and a 263-berth marina. Private cars are banned — it’s served only by golf carts and buses. Prices can reach as high as US$12,800 per month for a 1,995-sq-ft duplex with a terrace overlooking the beach and within walking distance of the ferry pier, according to Savills Hong Kong Ltd residential services. Expat families make up half of the enclave’s residents.

Another escape is Repulse Bay on the south side of Hong Kong Island. A 20-minute ride from downtown, it’s favoured by expats because of its proximity to the Hong Kong International School, beaches and panoramic views of the South China Sea.

At the Lily, prices range from US$21,850 per month for a 2,602-sq-ft, three-bedroom apartment on the 12th floor to US$58,500 for a penthouse duplex, according to Jones Lang LaSalle, the property’s sole leasing agent.

Where Grades Matter

For many, access to good schools is more important than the commute time, said Stella Abraham, head of residential leasing and relocation services at Jones Lang LaSalle.

She said the Drake, a new development by the Manhattan Group in the Tuen Mun district of the New Territories, appeals to families with children enrolled in the nearby Harrow International School. Rentals range from US$5,500 a month for a 1,934-sq-ft apartment to US$14,700 a month for a 4,510-sq-ft house with a small garden.

There’s a natural limit to how far one can move in search of more space. The Drake is already closer to the mainland than it is to downtown, and the opening of a new bridge to Macau and China, expected later this year, will bring more competition from those looking to live close to the border. — Bloomberg