Hong Kong's Luxury Property Prices Propped Up by Quantitative Easing

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According to JLL's latest Residential Sales Market Monitor Report, despite continued social unrest and a contracting economy, Hong Kong's luxury residential market gained momentum in May as quantitative easing started to take effect after a relatively quiet period since Christmas/New Year

In the primary sales market, several eye-catching transactions were made. An apartment in 'Duke's Place' at Jardine's Lookout was sold for HKD 222.1 million, while a villa at 'Mont Rouge' on Beacon Hill changed hands for HKD 370 million. This translates to HKD 78,000 per sq. ft and HKD 71,873 per sq. ft respectively.

JLL believes that the recovery in market sentiment and activities appeared to result from significant monetary easing in most regions and the stabilisation of COVID-19 across Greater China. JLL's figures show that since the 2009 Global Financial Crisis, capital values of luxury residential properties have risen by 139%, which in large part was due to quantitative easing measures that took place over the years after the crisis.

Henry Mok, Senior Director of Capital Markets at JLL in Hong Kong, said: "Developers are maintaining a constructive view on the outlook for the high-end residential market in Hong Kong. This sector has gained momentum and there is still plenty more to look forward to. Luxury residential projects to be launched shortly include 'Central Peak' in the Mid-Levels East and '21 Borrett Road' in the Mid-Levels Central."

In the land sales market, Tai Cheung Holdings secured a residential development site in Ap Lei Chau via government tender for HKD 1.33 billion, or HKD 15,097 per sq. ft, nearing the upper limits of the pre-tender expectations.

Nelson Wong, Head of Research at JLL in Greater China, said: "Looking back over the past decade and the experiences we have learnt from, we can tell that monetary responses to the COVID-19 outbreak are likely to ease the downward pressure on asset values. Housing properties, as an investment asset, are likely to benefit from stronger demand, albeit visible near-term risks."