Explosion of new residential units to hit Hong Kong market soon
According to JLL’s latest Residential Sales Market Monitor released this week, Hong Kong’s private residential completed are forecasted to climb 52% from an average of 14,500 flats per year over the last four years to an average of 22,000 flats per year between 2018 and 2021.
However, the expanding supply pipeline, said to be an important scales-tipping factor, is not expected to immediately trigger a housing correction in the market.
Henry Mok, Regional Director of Capital Markets at JLL in Hong Kong said, “Developers are expected to pick up pace in their launches, as new flats on the market continue to be readily absorbed. New launches had so far been able to ride on the success of previous projects, with ‘Cullinan West’, for instance raising prices by 10% for their second phase of flats, just six months after sales of their first phase,”
“Buying sentiment is expected to hold up amid strong performance of the equity market as well as a recent upgrade in Hong Kong’s GDP forecast for the full year from 2.8% in 2Q17 to 3.5% in 3Q17 according to Oxford Economics. Hiring intentions are also positive, even with the city’s unemployment level standing at just 3% as of October, the lowest three-month period figure since February 1998,” said Ingrid Cheh, associate director of research department at JLL.
From the recent public land sale results where the consortium comprising Sino Land, K Wah International, Wheelock Properties, SEA Holdings and Shimao Property paid a record-breaking HKD 17.3 billion for a residential site in Cheung Sha Wan, Cheh said developers are holding a positive stance on the market outlook and may continue to bid aggressively for upcoming land opportunities.
Capital values of mass residential properties have grown 13.1% in the year-to-date, on track to grow 15% for the full year. Mok expects the growth to stabilise to 0-5% in 2018.