What it's like trying to sell a home in the world's most expensive real-estate market right now, according to 4 agents who work in Hong Kong
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- The Hong Kong real-estate market is seeing a surge in demand for new off-plan launches.
- Citizens and expats wanting to leave the city quickly are willing to negotiate and take price cuts.
- Agents are optimistic that the Hong Kong real-estate market will improve by the end of the year.
Hong Kong's real estate market is showing signs of bouncing back after a slump caused by the city's COVID-19 restrictions, multiple property agents told Insider.
In 2020, Hong Kong was named the world's most expensive real-estate market, according to real-estate consultancy CBRE Global Living, with average property prices of around $1.25 million.
But then the pandemic hit, and the city's strict zero-Covid policies led to a mass exodus of residents.
That was especially true earlier this year when Hong Kong instituted strict curfews and lengthy quarantines in response to the spread of the Omicron variant. In February and March, there was a net outflow of 65,295 and 66,334 residents, respectively, according to immigration data from the Hong Kong government. This was a stark difference from the same period last year when more residents were entering than leaving.
The real-estate market saw a slump in transactions. The number of residential transactions recorded in March was 2,869, compared to pre-pandemic levels in March 2019, when there were 5,231 residential transactions recorded, per Knight Frank.
But that may change: The country eased some of its restrictions from April 21. The government now permits public gatherings of up to four people, and there is no longer a ban on private gatherings involving more than two households. On May 1, non-Hong Kong citizens were also granted permission to enter the country.
Insider spoke to four Hong Kong-based real-estate agents to get an inside look at what's happening in the market right now.
A good time to start looking, especially for projects that are not yet developed
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As COVID-19 cases have declined over recent weeks, real-estate agents started fielding more inquiries from potential buyers, Trista Lau, a property consultant who works for Hong Kong Property Services, told Insider.
"The last few months, there were a lot of government restrictions, so people were not willing to go out and have a look at properties that they wanted to buy," Lau said. Apartment searching has gotten easier now that restrictions are relaxed, and people are beginning to restart their house-hunting efforts, she added.
In February, property sales dropped by 55.5% from January as many property launches were suspended due to the COVID-19 restrictions, per data from Knight Frank. To make up for lost time, developers are now rushing to launch new off-plan residential units.
Off-plan properties are projects that have yet to be constructed. They are often seen as opportunities for investment due to capital gains as the home accrues value as it's being built.
"Developers no longer have to deal with so many restrictions to build the flats, and also the companies are looking forward to a good property market," Shawn Tam, another property agent from Hong Kong Property Services, told Insider.
And it appears there is still plenty of demand.
Four new high-end projects, including Monaco Marine and Grand Mayfair I, were made available for sale starting April 22, according to property launch notices on Hong Kong Property.
In the first round of sales, Grand Mayfair I received more than 10,000 applications, Tam said. The apartments range between 339 and 768 square feet and are priced from $7.23 million to $17.74 million Hong Kong dollars (approximately $921,000 to $2.26 million). Only 388 units were available during the first phase of the sale, making this initial launch more than 25 times oversubscribed.
At Monaco Marine, property developer Wheelock recorded almost HK$3 billion ($382 million) in sales for the first phase of the launch, property agents told the South China Morning Post.
Both projects are expected to be completed in the next few years, Tam added.
Those who urgently need to sell are willing to negotiate prices
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People looking to leave the city soon are more open to price negotiations, Lily Wong, a Hong Kong-based luxury property agent with over 37 years of experience, told Insider.
Sellers — both expats and Hong Kong citizens — looking to leave the city tend to have realistic asking prices. They are more likely to keep in line with the market price and the bank valuations, compared to sellers remaining in Hong Kong, she said.
However, these price negotiations often depend on the seller's urgency, Rosalyn Wong, an agent at Habitat Property, told Insider.
"Some of my clients from Australia or the States are planning to go back home. They are sending their families back, so they're more willing to drop their price because they are looking to sell within a short period of time, maybe two to three months," she said.
In one instance, a seller who had already moved back to England ended up selling her property for less than HK$12 million ($1.52 million), despite her initial asking price of HK$13 million ($1.65 million), Tam said.
Despite the market drama, experts say buyers shouldn't expect prices to drop drastically
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Goldman Sachs analysts forecast that housing prices in Hong Kong will see a 20% decrease in the next four years, per Bloomberg. But according to Wong, price drops are not as big as potential buyers expect them to be.
"Some people have the wrong impression that the market has dropped a lot since people are rushing out, so there should be a lot of bargaining on the market, which is actually not true. It's not as big as they think it is," she said.
She added, "Let's say the asking price is HK$40 million, and they want to make an offer like HK$32 million. But that's not possible, you know."
With the easing of border controls and Covid restrictions, there is also anticipation that people who left the city might return to Hong Kong, fueling the demand for homes.
Overall, all four property agents told Insider they're optimistic about the market outlook towards the end of 2022. The general agent sentiment is that demand for Hong Kong real estate will always be high, both from citizens and foreign investors.
At the end of the day, there's limited land in Hong Kong, making the market extremely competitive. All the agents, including Wong, believe that it's unlikely any price decreases will be drastic or sustained.
"Ever since I joined the business, supply has always been less than the demand," Wong said.
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