Hidden Gems: Hong Kong’s Up and Coming Districts For Savvy Home Seekers

Posted in Ask An Estate Agent

The city’s luxury districts are well-documented, but when it comes to acquiring new residences, investors would do well to consider the unexpected.

When it comes to Hong Kong property in 2020, the adage of “nothing new under the sun” is a truthful one. The city’s geographical contraints mean there’s little chance for the birth of an entire district along the lines of King’s Cross in London, or New York’s Hudson Yards. The closest Hong Kong has to that kind of massive re-imagining is the ongoing development of the former Kai Tak airport. Stay tuned.

Hong Kong property
(Image credit: Kai Tak Oasis)

So when it comes to identifying Hong Kong’s most underrated, overlooked or emerging luxury districts, buyers and agents need to think creatively — and look to the future. That means considering where value can be found, and embracing the evolving definition of ‘luxury’ itself. Vibrant street life and walkability have become key considerations for buyers and tenants, neck-and-neck with the longstanding question of accessibility. With the prospect of periodic city-wide lockdowns increasingly becoming the norm, we’ll all be eyeing escapes at home — like those found in massive country parks and generous hiking trails on the western side of Hong Kong island and the water on all sides in the south. In 2020, such options on your doorstep are the definitive embodiment of luxury.

For decades, the Holy Trinity of premium living has been (and remains) The Peak, Repulse Bay and Mid-Levels, Central. These neighbourhoods are traditional bastions of space, setting and exclusivity. In recent years, Sai Kung, Clearwater Bay and, to an extent, Deepwater Bay have lobbied for a place on that list: Thanks to their close proximity to water, low housing density and increasing ease of access. But as buyers (and renters) get younger, and social habits evolve, the concept of what goes into a luxury home is morphing similarly into something more design-driven, sustainable, urban and authentic. No longer are marble bathrooms enough.

Hong Kong property
Repulse Bay

The first sign the tide was turning was the rush to Kennedy Town in 2009 (market watchers will recall the MTR Corporation announced a much-watched extension that same year). A few intrepid small investors and developers looking at the long view had already started making plans (The Merton was completed in 2005), and before long values were rising. People moved in and more elegant residential towers went up (Cadogan). Those were followed by innovative restaurateurs, cafés and retailers. Before long Kennedy Town had become gentrified and was bucking for luxury status.

Hong Kong property

There are plenty of corners in Hong Kong now flirting with a similar pattern: involving a mix of value, connectivity, and lifestyle. Lantau Island, now with sleek developments like Whitesands and Botanica Bay, is an overlooked luxury district — one which could garner fresh attention for the resort-like lifestyle it offers. For the adventurous, undervalued Aberdeen and its ingrained waterside community make for a smart long game investment — one that will mature when the South Island Line West connects it to the rest of the city. The direction Kai Tak heads in — on what will ultimately be the Tuen Mun MTR line — is anybody’s guess, though the Oasis development is a solid indication of what’s to come.

Hong Kong property
(Image credit: Regalia Bay)

Stanley, Mid-Levels West and Pok Fu Lam currently lead the pack on the value front. Prices in conventional high-end locations — the aforementioned trinity — have remained resilient (as is usually the case in times of geopolitical instability) but just a few steps away are pockets which offer tremendous value. In many cases, they’re even preferable. Stanley, for example, features beaches and greenery; a solid track record of lifestyle amenities; hip waterside dining; and a forthcoming bypass that puts it just 25 minutes away from Central — the same distance as nearby Repulse Bay. The difference being an approximate 10-15 discount on the former. Stanley flats in Regalia Bay or 22 Wong Ma Kok Road rival much of what’s available in Repulse Bay (and surpass them when you consider it’s not necessary to get in a car to run to 7-Eleven).

But Hong Kong’s real unsung hero could be Sham Shui Po. Mainly known once upon a time for pirated DVDs, fabric stores and the Golden Computer Arcade, it’s now emerging as an ultra-hip district — and doing so under the radar. Down the road, one MTR stop from re-energised Cheung Sha Wan, the streets there are now cluttered with restaurants, chic cafes, underground art spaces and young tech start-ups, many inspired by the (now-closed) Savannah College of Art and Design. As luxury continues to becoming increasingly design-led, regenerated flats in older buildings with personality are becoming more appealing to the modern, high-flying tenant. Sham Shui Po is at a similar point in its development curve as Kennedy Town 15 years ago, and the slow trickle of revitalised industrial buildings and residential towers — naturally, with a little boost from the Urban Renewal Authority — suggest the area is getting ready to kick-off its reinvention as a contemporary luxury hub.

Victoria Allan
Victoria Allan is the founder of Habitat Property, a real estate company specialising in the sale and leasing of luxury property in Hong Kong. Prior to establishing Habitat in 2001, Allan held the position of Commercial Leasing Director at Colliers Jardine. She has over 25 years experience in residential and commercial real estate across a variety of global markets — including Hong Kong, Australia, Canada and the US.

Should you Invest in Hong Kong’s Property Market during CoViD-19?

Posted in Ask An Estate Agent

Unless you’ve been living under a rock these past 10 months, you’ll know that Hong Kong’s real estate sector has been experiencing its sharpest decline in nearly a decade. Amid the worst economic contraction in the region’s history (8.9 percent in the first quarter), commercial investments have proven particularly vulnerable — hit by the lethal one-two combo of months-long anti-government protests, then the global coronavirus pandemic.

Data released by investment firm CBRE indicates these factors (and the resulting slump in consumer confidence) contributed to one of the worst quarters for retail property transactions since 2009: only 20 deals, roughly amounting to HK$7.5 billion, have been made so far this year.

By contrast, though there remains an air of caution among consumers, experts’ prognosis of the city-wide housing market is steadily improving. To make sense of the government’s quantitative easing policies, the latest price data, and ultimately, whether you should wait longer for the market to bottom out; we phoned up Victoria Allan — an ex-director at Colliers who now manages her own premium realty firm, Habitat Property, here in Hong Kong.

Let’s start with an overview: what sort of shape was Hong Kong’s real estate market in at the end of 2019 versus around the time that the first wave of coronavirus infections hit? What are the most noticeable changes?

VA: Towards the end of 2019, the city’s property market already wasn’t in a great way — given all of the (ongoing) political protests. Those had a significant unsettling effect on the market, pushing prices down across the board by about 10 percent. As for CoViD-19, market sentiment was already becoming negative as early as Christmas 2019 — that’s because it was playing out in conjunction with a wider global downturn brought on by the pandemic.

Given the current position of the housing market, have there been any changes in government policy that have made it easier to purchase residential property?

VA: As a result of the pro-democracy protests, the HKSAR government actually altered the policy for first-time homeowners: enabling them to gain easier access to property valued at under HK$10 million (by reducing the amount they’d have to pay in their deposit). At this time, no further adjustments in policy have been made to take into account the economic impact of CoViD-19. It’ll be interesting to see if the government relaxes these policies. However, having had tight restrictions on lending over the last decade, there’s very little debt in the Hong Kong property market which can help to support price levels.

What have some of the most obvious impacts been on buyers since the property market was hit by Covid-19?

VA: We’re seeing many buyers seize the opportunity to invest — especially where it’s for self-use. Market prices are being discounted by 10-20 percent (as compared to 12 months ago), so it’s actually an opportune moment for those who want to purchase their first property or sell the one they currently own and upgrade. Sellers also need to keep a closer eye on personal liquidity, so it’s easier to negotiate with them for a reasonable price.

Hong Kong property
The sprawling penthouse in Repulse Bay has come down to a price (negotiable) of HK$95 million over the past two months. (Image source: Habitat Property)

In the case of new homeowners, it’s a great time to enter the market with either a small investment or property for self-use. Ditto for listings where the price is below HK$10 million — that’s a huge opportunity to buy at lowered prices whilst being able to finance at a higher level (i.e. up to 90 percent financing for properties priced below HK$8 million; and 80 percent for those below HK$10 million).

Hong Kong property
The Villa Helvetia penthouse includes amenities made possible by the surrounding environment of Repulse Bay – including a terrace, private garden and fibre optic cabling. (Image source: Habitat Property)

Foreign investors are also starting to re-examine the Hong Kong property market, as experts generally see it as a market with more medium-term stability than Europe and the U.S. As the number of CoViD-19 cases increases in those regions, their economies are projected to be worse-hit than Hong Kong.

Continuing in that vein, could you give a brief rundown of the opportunities that investors now have that mightn’t necessarily have been available if they were purchasing pre-CoViD-19?

VA: Absolutely! In addition to the reduction in market prices that has averaged 10-20 percent, another side effect of the public health emergency has been that a more varied range of properties has come up for sale. Even though we’re seeing some evidence that suggests the market hasn’t yet bottomed out, most buyers can be confident that if they buy now they’ll be able to take advantage of some discount.

Which residential districts in Hong Kong do you think best support these findings about the current market?

VA: For the purposes of easy illustration, the most dramatic reductions representing good ‘value’ can be found in high-end areas like Repulse Bay. The median price for a three-room apartment in developments like Ruby Court, for instance, has come down to HK$53 million.

Hong Kong property
Buyers and nascent investors will find the best, most dramatic bargains in non-urban neighbourhoods such as Repulse Bay (pictured) or Stanley.

To wrap up: can we get you to make a top-line prediction about the market’s trajectory over the next 6 to 8 months?

VA: Personally, I think that the market is already starting to stabilise — there’s more confidence locally given that Hong Kong seems to have the total number of CoViD-19 cases under control. However, the region’s borders still haven’t been reopened — which raises the possibility (however remote) of a third wave of cases. Last but not least, we have the reoccurring issue of protests: that’s bound to keep a lid on consumer sentiment and pricing. All told, I think the market could fall another 5-10 percent in 2020 before making a full recovery.

Hong Kong property

Victoria Allan is the founder of Habitat Property, a real estate company specialising in the sale and leasing of luxury property in Hong Kong. Prior to establishing Habitat in 2001, Allan held the position of Commercial Leasing Director at Colliers Jardine. She has over 25 years experience in residential and commercial real estate across a variety of global markets — including Hong Kong, Australia, Canada and the U.S.

Randy Lai