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House Bound
In a traditional flat market, Hong Kong’s houses automatically equate with luxury
| Text : Elizabeth Kerr | Photo : www.thinkstockphotos.com |
The choice between a house and an apartment is a lopsided one in Hong Kong. In a city where over 80 percent of residences are flats, houses are a relative rarity regardless of the demand and the resulting premium on them — and there is in fact a considerable demand.
If you’re in the market for a house — new build or second hand — expect to have to dig deep: The unit price for a high-end house hovers around $60,000 per square foot to start, versus luxury flat prices of $20-30,000 depending on location and view. Surprisingly (or perhaps not) there’s not much left in the $200 million-dollar range for sale right now, or even any of the renovated homes on Plantation Road. But you can get houses in relatively far-flung locations like Stanley and Tai Tam starting anywhere from $50 million for a second hand home. In other words, does a house in Hong Kong immediately equate with luxury? “Oh, yes,” says Ricky Poon, Executive Director of Residential Sales at Colliers International.
Most people toying with the idea of a house are doing so for generally the same reasons: Roomier interiors, privacy, the quiet that often comes with house-heavy neighbourhoods and the bonus of private outdoor space. But a key factor for house buyers to consider is the absence of freehold land in Hong Kong. When you purchase a house in North America, Europe or Australia, the lot that it sits on is included and is also owned by the buyer. “That doesn’t happen in Hong Kong. You’re buying the development, but the land is still, in most cases, owned by the government.” A single dwelling house gives you land as well, but you’re still on the hook to pay the lease to
special reportthe government explains Poon.
Though logic would dictate that the big players — Henderson Land, Sun Hung Kai Properties, Wheelock Properties, Kerry Properties and so on — would prefer put up apartments and glean the greatest number of buyers from a project that they can, many are in fact willing to dip into the house market as long as the numbers are on their side. As for a developer’s considerations, “There’s plot ratio and site coverage, whichever is greater,” Poon states. So a developer, say Sung Hung Kai, whose houses at Shouson Hill used to be apartment blocks, assesses what is feasible first, and weighs what town planning has to say. “So they demolished the old [building] and they submitted plans to build houses. They know house demand is quite high, and that they can sell them at a premium. That’s why they changed the plan. They don’t lose anything … [and made] use of the site coverage and maximised profits,” Poon theorises.
Just a few years ago Wheelock built, and promptly sold, five luxury homes on Gough Hill on the Peak. At the time, the houses were valued at upwards of HK$200-250 million each. More recently, SHKP announced plans for the aforementioned 22-home development at 9 Shouson Hill Road (also on the Peak); Henderson Land is currently building King’s Park Hill in Homantin, a development of 42 (in addition to low-rise apartments); Fortune Link Development is building 2 houses at 3 Black’s Link; and Tai Cheung Holdings is at work on 3 Plunkett’s Road, where a development of four houses is planned. There are plans for houses by a host of other developers; this is by no means the entirety of house construction in Hong Kong right now.
One of the hot spots for more affordable houses is the booming Sai Kung area. Expected to see a massive population surge within the next few years, Sai Kung is a favourite residential destination for those seeking an “entry level” house — entry level meaning HK$10-20 million. Located not too far from Central, Sai Kung and its village atmosphere and noticeably superior environment have made it a favourite weekend “getaway” and the location of choice for young families. It’s also the location of a clutch of village houses that can be rented or, occasionally, purchased. Sadly, owners don’t often sell their village houses, right? “Oh, in Sai Kung they do,” Poon states emphatically. “They rent them and sell them, because owners know expats like Sai Kung. First of all, the prices are actually lower.” You can get a 2,100-square foot home in the area starting at $15-18 million or spend up to approximately $35 million. If you’re lucky, you can find a vendor with short-term tenancy for the land too, and as such, you may find yourself with an actual garden or a swimming pool.
Though land rules and regulations are complicated and demand thorough research (the Land Department can provide details), owner/builders who are entitled to land and who have already paid their government premiums can build whatever they wish. After that, the property is sellable in the second hand market. Sai Kung’s popularity is far from waning, and Poon estimates that prices can only head upwards, pointing out that prices have already jumped almost 100 percent — sometimes more — over just five years.
Houses are not confined to tony addresses on Hong Kong Island or village-like spots akin to Sai Kung. The New Territories (Shatin, Tai Po, Fanling, Yuen Long) can also rank as middle class, or affordable. It’s also dotted with what anyone from North America would call subdivisions and can be considered Hong Kong’s own version of the suburbs. Poon describes these as popular with local industrialists: factory owners with facilities in Shenzhen and southern China, which are easily accessible from those locations.
Colliers’ own research forecasts continued growth and demand in the luxury sector properties for 2010, with prices rising 10 percent over the next 12 months. Though that’s in reference to flats, there’s little reason to believe houses won’t follow a similar path. Recent transactions include sales on the Peak’s Strawberry Hill (over $31,000 per square foot), Repulse Bay Road (almost $40,000) and Mount Kellett Road (nearly $50,000). So who makes up the market for Hong Kong’s nearly finite house market? For the most part, it’s the people you’d expect. “If you’re talking about the prestigious locations, the luxury houses, I would say 40 to 50 percent are Mainland Chinese and the rest are local high net worth people: celebrities, industrialists, publicly listed company chairman and so on,” Poon states flatly. At least you’ll know the neighbours before you move in.
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