Hong Kong’s luxury residential price growth shoots to 28%

Prices grew strongly by 7.3% qoq in 2Q11.

Hong Kong delivered the strongest price performance among monitored markets in Asia, according to Jones Lang LaSalle’s report.

Despite the latest round of government measures aimed at curbing speculative demand, luxury residential prices in Hong Kong grew strongly by 7.3% q-o-q in 2Q11, due to continuing rental growth and tight supply, according to the recent Residential Index from Jones Lang LaSalle’s research team. In the twelve months to end-2Q11, Hong Kong delivered the strongest price performance among the monitored markets, with growth of around 28%. On the other hand, prices in Singapore’s luxury prime market remained stable for the fourth consecutive quarter as buyers remained cautious after recent government tightening measures. Despite falling sales volumes in the China Tier I markets, capital values remained largely unchanged for luxury apartments in Shanghai, though average prices in Beijing fell by 1.9% q-o-q.

“In Hong Kong, we saw a continued growth in luxury residential prices last quarter of 7.3% as a result of the continued low interest rate environment, progressive rental growth and limited supply in the market. We saw a growing percentage of Mainland Chinese buyers in the luxury residential market, despite the decline in capital values in Beijing” says Joseph Tsang, Managing Director and Head of Capital Markets, Hong Kong.

Luxury residential prices are generally likely to remain stable or see slower growth for 2011 due to ongoing policy and interest rate risks. Prices in China are expected to either remain flat or edge down slightly over the rest of this year as developers will likely introduce more price discounts and launch less high-priced units over the next 12 months. Prices in Hong Kong and Singapore should remain largely stable over the second half of 2011, buoyed by continued demand from end-users and long-term investors.