Top Five Fastest Growing Districts in Terms of Affluence in Hong Kong

HONG KONG, May 1, 2018 – According to JLL's latest Residential Sales Market Monitor report for April, Yau Tsim Mong, Yuen Long, Islands, Sai Kung and Kwai Tsing are the top five fastest growing districts in terms of affluence among economically active households in Hong Kong. Strong income growth should render support to local property prices and serve as a potential demand driver for upcoming housing supply in the years to come.

The median monthly household income of economically active households in these five districts grew in the range of 35.7%-40% from 2012 to 2017. Of these, Kwai Tsing is the only district that has seen nil new completions over the last five years and is forecasted to have a mere 1,000 units coming on stream in the next five years. Strong income growth should benefit the delivery of new supply, further substantiating confidence in the residential market outlook for these districts.

Recently, the tender for a residential site at the junction of Liu To Road and Hang Mei Street in Tsing Yi has been awarded to Wang On Properties for a premium of HK$ 867.3 million, representing an accommodation value of up to HK$10,800 per sq. ft. for the residential portion. This indicates that the selling price for the residential units on the site, upon completion, could be in excess of HK$21,000 per sq. ft., potentially setting a new benchmark pricing level for Tsing Yi Island and reflecting the developer's optimistic outlook for the market.

Henry Mok, Regional Director of Capital Markets at JLL, says: "Historically, Kwai Tsing has been among the popular spots for Hong Kong people to get on the first rung of the housing ladder. However, there has been a lack of supply being delivered in the district over the last five years (2013-2017). Still, it is worth noting that in accordance with the Census and Statistics Department data, Kwai Tsing was one of the top five fastest growing districts in terms of affluence, with the median monthly household income of economically active households increasing by 35.7% from 2012 to 2017. This suggests that such an income growth is not driven by new supply drawing in more affluent families from other districts. Rather, it was mostly an organic uplift in local affordability, which could be a potential demand driver for upcoming supply in Kwai Tsing.

Ingrid Cheh, Associate Director of Research at JLL, concludes: "Besides Kwai Tsing, some other districts whose future developments may benefit from a local demand base with higher affordability are Kwun Tong, Wong Tai Sin and Southern district. These districts have seen a combination of less than 1,000 units of new supply and over 25% income growth among economically active househodls over the past five years."