Rare fund activity in the super luxury sector may reflect contrasting views on the future market direction.
- The stock market correction and the first increase in the prime rate since 2018 have dampened luxury residential sentiment, with heaviest post-GFC quarter-on-quarter price falls registered in Q3.
- Some eye-catching deals, such as the sale of House 3B of Gough Hill Residences for HK$500 million suggests that super luxury products are still highly sought after.
- Luxury sites and en-bloc buildings are still in demand, and with two sites on Hong Kong Island to be tendered in Q4, we expect both to attract market attention when launched.
- Luxury volumes remained thin in Q3 across all price brackets due to subdued sentiment. With economic recession looming and rising geopolitical tensions in mind, many ultra-high net worths in Hong Kong may opt to diversify their local portfolios globally to mitigate such risks.
- Given the negative outlook, we expect the luxury residential market outlook to be clouded over the next nine to 12 months, with values likely to correct by 10% over 2022, and to decline by a further 5% to 10% over 2023.