If Hong Kong has an expatriate enclave, it’s Discovery Bay. Since the mixed-used mega-project opened in the early 1980s, it’s become the go-to neighbourhood for new families relocated from overseas, even with Sai Kung giving it a run for its money. With just under 20,000 residents, DB enjoys a low density rare in Hong Kong, abundant leisure facilities and there are few areas more welcoming of pets than DB. Though the area has traditionally skewed expats, the mix of foreign nationals and local Hongkongers has shifted in recent years, with more and more natives of the SAR opting to take advantage of outdoor space, relatively clean air and larger flats.
Ties to Banking
But DB’s fortunes rely more on the city’s banking and financial services industries than most others (Mid-Levels and Island South excepted). The past year or two have been eventful. The expanded double stamp duty (up to 8.5 percent) and the buyer’s stamp duty (applicable to non-permanent residents) cooled the market as intended but disincentivised three-, four- or five-year residents from making a purchase too. Luxury property is defined as priced over $10 million for sales, and while the mid-market ($3 to $6 million) is wobbly but not completely stagnant, the $10 to $50 million range — right in DB’s wheelhouse — has been hit hard on the back of those duties.
The corporate shift away from finance and toward retailing, hospitality (with lower staff budgets) and other sectors hasn’t helped either. Also influencing DB as a submarket is the falling number of expatriate arrivals to Hong Kong and lower housing budgets for those that do relocate to the SAR. The luxury leasing sector has been hit hardest by that particular trend (the mass market has largely been unaffected), but DB sits in an awkward middle position. Luxury property rentals start at roughly $100,000 per month. Discovery Bay has a bit of everything, making for a tricky market. Affordability is key and new families are starting to turn their attention to outlying areas that previously fell off the radar, such as Tseung Kwan O and Tuen Mun. “For families looking for more space, locations in the New Territories like Clearwater Bay and Sai Kung, as well as Discovery Bay, were very popular, although they are not so affordable any longer,” Jones Lang LaSalle head of residential leasing and relocation services Anne Marie Sage told the SCMP in November. Rents in Discovery Bay have risen 17 percent since 2009 according to research by Savills.
Still an Option
Discovery Bay’s property market is unlikely to implode, no matter how much it cools down for a stretch however. There’s too much there that still attracts families seeking a specific standard of living. DB is (mostly) car-free, it has its own beach, respectable retailing and services, it is actively green and was so far ahead of the general green movement and has a handful of respected international schools, including a Montessori kindergarten, Discovery Bay International School and Discovery College. Residents are indeed tied to the ferry schedule, but DB isn’t as isolated (or Stepford Wives-ish) as the wider perception makes it out to be. The North Lantau Highway is easily accessed by tunnel and a small bus fleet puts residents a short ride from Sunny Bay and Tung Chung MTR stations.
That made the launch of Amalfi a foregone conclusion. Discovery Bay’s latest residential project at Yi Pak Wan down the road from Siena One, Amalfi is three 16-storey blocks, where despite the citywide slowdown, prices hit over $60 million in October for an Amalfi One two-level pool house suite. Transactions for lower floor units, some in the neighbourhood of 1,400 square feet, average around $11,000 in the same tower but dip as low as $10,500 in Amalfi Two.
That still makes Discovery Bay something of a bargain regardless of prices increases. With the highest prices at a new project clocking in at just over $27,000 per square foot, there could be room to move, particularly RICS’ November statement that commercial property sentiment stabilised in the third quarter. According to RICS’ Occupier Sentiment Index, “Tenant demand rose at the headline level and specifically within both the office and industrial sectors. Despite availability outpacing demand, a turnaround in occupier demand appears to be filtering through into rental expectations. Moderate rental growth is expected over the coming quarter in Hong Kong.” Similarly, Colliers International’s 2015 Global Investor Sentiment Report predicted investment into the office sector around the world to rise in the coming year. With the residential sector traditionally following the commercial one, buyers and tenants could be returning to Discovery Bay sooner rather than later.