Less than 100 luxury residential will be completed in 2019

Housing prices in traditional luxury residential areas will stay firm

January 30, 2019

HONG KONG, 30 January 2019 – Less than 100 new luxury units (1,722 sq ft or above) will be completed in Hong Kong's traditional luxury residential areas, including The Peak, Southern district, Kowloon Tong, Homantin and Mid-Levels, in 2019, according to JLL's latest Residential Sales Market Monitor.

JLL's Residential Price Index shows capital values in the mass residential property market having retreated by 4.2% since peaking at the end of August 2018, ending 27-months of consecutive growth. The luxury segment, however, has been more resilient, with capital values remaining largely flat in the fourth quarter of 2018.

Notable big deals lately included the sale of a house at Ultima in Homantin for HKD333.8 million and another at Serenity Point in Sai Kung for HKD188.0 million. In both instances, the transactions set new record highs for their respective areas, in terms of unit price.

Henry Mok, Senior Director of Capital Markets at JLL, said: "The different profile of buyers in the two market segments plays a key role in the dichotomy in price trends. While the luxury residential segment is being supported by cash-rich investors that stay fixated on acquiring their dream homes, the mass segment is more sensitive to market sentiment and filled with buyers that are more pragmatic when making purchasing decisions. With the market still being dominated by negative sentiment, many in the latter will opt to take a wait-and-see approach in a bid to capture bigger price cuts and lower transaction costs."

"Looking back at the previous market downturn in 2016, when uncertainty arising from a US Fed rate hike at the end of 2015 and Brexit weighed on Hong Kong housing market, capital values in the mass segment retreated by 10.1%. The luxury segment recorded a more modest decline of 1.9%. Taking into account that there will less than 100 units completed in traditional luxury areas in 2019, the top-end of the marketis likely to remain more resilient to faltering market sentiment through the current downturn, especially if it is shorter and milder than expected" he added.

Denis Ma, Head of Research at JLL, added: "Needless to say, uncertainty prevails amid an escalation in trade tensions between China and the US, which could disrupt global economic growth and dampen investment activity. As a small and open economy, Hong Kong will be affected. In this regard, the current market outlook remains heavily dependent on how the trade war plays out, the outcomes of which will dictate market sentiment.

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of over 90,000 as of December 31, 2018. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com