Mainland Chinese buyers expected to flock to luxury Hong Kong housing now that Shanghai’s lockdown is over, developer says

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Mainland Chinese buyers are expected to return to Hong Kong’s luxury housing market now that Shanghai has lifted its two-month-long lockdown, driving sales to pre Covid-19 fifth-wave levels in the third quarter of this year, according to Wheelock Properties.

The Hong Kong developer expects to launch 1 Plantation Road, a new 20-house luxury project on The Peak as its sales agent in the third or fourth quarter of this year, depending on construction progress, said Ricky Wong, the firm’s managing director.

“I believe that since the lockdown has been lifted, [mainland buyers] will consider returning to Hong Kong in the short term,” he said. “Comparatively, the pandemic situation in Hong Kong is less urgent or severe. Many wealthy and powerful people on the mainland are also considering buying second homes. Many mainlanders have businesses in both Hong Kong and mainland cities. Some of them are considering moving their home bases to Hong Kong from China,” he added.

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The appetite for Hong Kong’s luxury homes is returning. For instance, inquiries for homes at Mount Nicholson and 77/79 Peak Road have risen by 20 to 30 per cent in the past month, recovering to levels seen before Hong Kong’s fifth wave of Covid-19 infections hit, and the number was high considering the values of the properties in question, according to Wong.

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The higher interest came as infection numbers in Shanghai plunged, and amid expectations that the city’s lockdown would be lifted on June 1.

“Hong Kong’s social distancing measures are less strict,” Wong said. “Hong Kong is relatively safe. You see that this time [Shanghai] has been locked down for a long time, it really has a special [impact] on their daily lives and businesses.”

The lift of the lockdown could “speed up their decisions” since some buyers had indicated their interest in Hong Kong properties at the beginning of the year, but their plans were interrupted by the outbreaks in both Hong Kong and Shanghai. Wong said mainlanders would be worried about further lockdowns as well.

Wheelock was hoping to capitalise on this renewed appetite as well as the reopening of the border with mainland China, as far as 1 Plantation Road is concerned. This means the third or fourth quarter were the right time for its launch, Wong said. The project is likely to sell by tender.

The project is being developed by Wharf (Holdings) in three phases. The first phase has homes ranging from 5,000 to 6,000 sq ft in size. Details about pricing are not yet available. The project will have 91,000 sq ft of gross floor area in total.

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The number of transactions involving the Buyer’s Stamp Duty, a stamp duty paid by corporate and non-local buyers, plunged to just 52 in April, its lowest level since August 2021. But Wong said he expected to see transactions for Mount Nicholson and 77/79 Peak Road this month. He also expected transactions in the third quarter to return to pre-fifth wave levels.

Wheelock received about 50 inquiries in the second half of May for the two luxury developments, which it markets. Currently, of the 48 apartments and 19 houses at Mount Nicholson, which has been developed by Wharf (Holdings) and Nan Fung Development, only seven flats and two houses are available. Of the eight flats at 77/79 Peak Road, only one is available.

The 4,230 sq ft Flat 15C at Mount Nicholson sold for about HK$583 million (US$74.3 million) in January.

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“Now, because of the pandemic, transactions of luxury houses are relatively few,” Wong said. “At the beginning of the year, transactions of luxury houses were quite satisfactory. But as soon as the fifth wave appeared at the end of January, it obviously stopped everything. Now is the time to restart [these deals].”

The number of housing transactions worth more than HK$20 million each is showing signs of improvement, rising 21.6 per cent to 141 in April from March, which marked a 26-month low for the segment, Centaline Property Agency said.

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