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Hong Kong Residential Sales - Jul 2022

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Contacts & Related Research

Luxury prices drift down

Stock market turbulence and a sharp rise in interest rates suppressed luxury market sentiment in the second quarter.

  • The latest stock market turbulence has affected luxury residential sentiment as have recent events in Mainland China.
  • A sharp rise of interest rates in the US (75 basis points in June to 1.75%, potentially rising to 3.5% by the end of 2022) has meant a rising cost of capital and a possible end to the negative real interest rate era in Hong Kong.
  • Some eye-catching deals, such as the sale of House 7 of No.15 Shouson for HK$870 million suggests that there is still demand for super luxury products.
  • Local developers remain keen to replenish landbanks by acquiring both private and public sites.
  • Luxury volumes remained thin in the first half, with the super luxury bracket less affected.  As landlords have held back in the first half, we expect to see more launches in the second. 

Though Mainland buyers are still finding it difficult to cross the border, there is still local interest in super luxury homes.  Meanwhile, developers are also keen to acquire luxury sites to replenish their landbanks.  Looking ahead, border reopening and the pace of rate hikes will be two key factors pulling the market in opposite directions.

Simon Smith, Savills Research & Consultancy
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