Hong Kong apartment prices go through the roof
Hong Kong's Cullinan development
Artist's impression of the Cullinan development in Hong Kong.
Sun Hung Kai Properties, the world's largest developer by market value, has raised the price of two penthouses in Hong Kong by 50 per cent to a record $HK75,000 ($11,075) a square foot as demand surges for luxury apartments.
The units will be offered for $HK300 million ($44.3 million) each, said Victor Lui, executive director of the company's real- estate broker. The apartments each have 372 square metres (4000 square-feet) on three floors, an outdoor garden and a swimming pool.
The number of sales and purchase agreements on Hong Kong homes worth at least $HK10 million ($1.47 million) more than tripled to 500 in August, from a year earlier, according to the Land Registry.
View The Cullinan, Hong Kong in a larger map
Homes at that price in Asia's second-most expensive market after Tokyo have appreciated by 30 per cent this year, Centaline Property Agency estimates. These have been driven higher by gains in the Hong Kong and China stock markets and record-low mortgage costs.
"The buyers will most probably be the ultra-rich mainland Chinese who like the location," Margaret Ng, senior director of client development and research at CB Richard Ellis Group Inc. in Hong Kong, said by telephone.
The properties, the biggest at the Cullinan development in the Kowloon district, were priced at HK$50,000 ($7,400) a square foot when Sun Hung Kai started selling units at the project in February. The Cullinan has 825 units and at 270 metres will be Hong Kong's tallest residential building.
Cullinan residents will also get access to an exclusive private jet service, provided VistaJet Flight.
Hong Kong's year-long recession ended last quarter, when a rebound in exports to China helped the economy grow 3.3 per cent from the previous three months. Wealthy buyers from mainland China have been "buoyed by gains in the equity market," Yuwa Hedrick-Wong, an economic adviser for MasterCard, said by email.
"Hong Kong's high-end property market is closely affected by demand from the affluent of mainland China," Hedrick-Wong said.
Mainland Chinese buyers accounted for between 20 per cent and 30 per cent of the almost 400 units sold at the Cullinan, according to Sun Hung Kai's Lui.
The Shanghai Composite Index rose 51 percent in the last 12 months, making it the world's best-performing benchmark globally a year after the collapse of Lehman Brothers Holdings sparked a credit crunch. Hong Kong's Hang Seng Index has gained 17 per cent in the same period and is up 49 per cent this year.
The highest price paid for a luxury property in the city in August was HK$212.9 million ($31.4 million) in PCCW's Bel-Air project in Pokfulam district, Centaline said in a report this week.
Hong Kong's record price for a luxury home was for a house in Sun Hung Kai's Severn 8 project on the Peak that sold in the first half of 2008 for almost HK$56,000 ($8275) a square foot.
Sun Hung Kai doesn't anticipate the higher price at Cullinan will turn off prospective purchasers.
"We're in negotiations with interested buyers, some of whom wanted alterations," Lui said. "They are receptive [to the price increase] considering the luxury sector has outperformed" the property market as a whole in Hong Kong.