Developers continue to seek after rare luxury sites

HONG KONG, 29 September 2020 – Approximately 1,400 luxury units are expected to be completed between 2020 and 2022. Among major sub-markets, Island South is likely to deliver only around 200 units, indicating scarcity in luxury sites, according to JLL’s Residential Market Monitor, released today.

Earlier this month, it was announced that the residential site at 37 Shouson Hill Road had been awarded to Hang Lung Properties by the US Government for HKD 2.566 billion. The accommodation value of HKD 54,138 per sq ft fell within market expectations.

Henry Mok, Senior Director of Capital Markets at JLL in Hong Kong, says: “Given the scarcity of luxury sites, the 37 Shouson Hill Road property could command a significant premium, particularly in times of buoyant markets. While the site caught market attention due to the identity of the vendor, we believe the transacted price is broadly reflective of Hong Kong’s current economic and market conditions with little premium for the site’s rarity. Developers remain keen on acquiring luxury residential sites due to the limited new supply of luxury residential and tight land supply for luxury residential development.”

Nelson Wong, Head of Research at JLL in Greater China, says: “The transacted price appears to be broadly in line with current market transactions. The relatively low absorption rate of luxury residential units, resulting in persistently rising vacancies among the Class E units (flat sizes 1,722 sq ft or above), which reached 13.8% as at the end of 2019. Despite this, the transacted price reflects a moderately positive view that the purchaser has about market prospects and the potential of the site.”