MAGAZINE 47 TALK OF THE TOWN

Back in 2007, Tokyo was ranked Asia’s most expensive city for luxury property but Hong Kong has since well and truly usurped that crown. For house-hunters at the high end, the average price of a 1,300-square-foot flat in prime Hong Kong is HK$9,129 per square foot and rising.

These statistics pertain to the luxury enclaves: the Peak, the highest tiers of Mid-Levels, Jardine’s Lookout and Island South. But even territory-wide, Hong Kong is topping the Asian leader board. The average price for a Hong Kong flat is 6.14 percent higher than in Tokyo, incredible when you think that our gross domestic product was 23 percent lower than Japan’s at US$26,824 (HK$209,092) in 2006.

In the 2008 Global Property Guide line-up of the world’s most expensive cities in which to buy property, Hong Kong is ranked sixth, Tokyo seventh, Singapore eighth and Mumbai ninth. Other Asian contenders include Shanghai coming in 26th, Bangkok 29th, Beijing 32nd, New Delhi 33rd, Manila 36th, Kula Lumpar 39th and Jakarta 44th.

Clearly Singapore is the contender to watch, since property prices rose 41 percent last year — their highest in over a decade. As the region’s safe bet, the Lion’s City is also a low-risk investment opportunity, due to its stable legal and tax environment and future economic prospects. At the same time, Thailand and Malaysia are coming up, with property available at incredibly low prices and tourism stronger than ever.

But the real investment opportunity this year might well be India, where property prices have more than doubled in the past two years. Growth is being driven by the country’s healthy credit market, and new housing is being built to sustain the fast-growing middle class.

According to CB Richard Ellis (CBRE), ten of the most expensive flats in Asia —in terms of unit price — are currently located in Hong Kong: three in Island South, one in the Mid-Levels and five on the Peak. At HK$55,736 per square foot, House 15 at 8 Severn Road, on the Peak, tops the board, while House C, Repulse Bay Road on the South-Side comes in tenth at HK$37,667 per square foot.

The only non-Hong Kong property to make the list is a penthouse at Roppongi Hills Residence in Tokyo, which rates as the second most expensive residential property in Asia, with a unit price of HK$45,929.

Luxury Hong Kong homes tend to be smaller than those in neighbouring Asian cities, while facilities and building quality are on a par. But notably the Roppongi Hills Residence penthouse comes in at just 2,385 square feet – around half the size of House 15, Severn Road.

Phenomenal views of Victoria Harbour are said to have clinched recent deals on the Peak, as have expectations that the price of the properties would increase by 20 percent in 2008.

Analysts agree that investors in prime Hong Kong property are likely on to a good thing. Last year, Hong Kong property prices rose 11.25 percent – the ninth fastest growth-rate in the world. And boosted by the strong economy, record increases of between 20 percent and 30 percent are expected this year.

What’s more Peak prices are among the highest in the world, in part because of the lack of supply. Only eight new houses were completed on the Peak last year.

“Around 20 homes will be coming on stream this year, and these will be new developments at Plunkett Road and Blacks Link,” says Alan Man, senior director residential at CBRE. And supply is likely to increase further next year as developers are converting old blocks at 12 and 2-9 Mount Kellet Road. We’ll be looking at townhouses and possibly some mid-rise homes.

“But for the near future supply is severely limited. The situation is unlikely to ease until 2010.”

Interest is high from both mainland and international investors. Coming in as the sixth most expensive in the world, (after London (central), New York, Moscow, London (elsewhere) and Paris), Hong Kong properties must seem quite a steal