Hong Kong remains as the world's most expensive real estate market. It recorded 6,885 property deals in May as the city eases pandemic measures. The average price citywide stands at HK$$15,589 per square foot, making it the world's least affordable market.
A controversial security law introduced by China has prompted the United States to threaten removal of Hong Kong's special status and is triggering concerns about capital outflow, sparking renewed pro-democracy protests and increasing tensions in a city trying to recover from the pandemic.
The doubts about Hong Kong's future has already prompted some residents to plot emigration to avoid the tightening grip from China. Non-resident bank deposits surged to a record in Singapore last week, an early sign that some people in Hong Kong are moving their money.
The recession and plunging retail sales have also taken their toll on real estate stocks, though they rallied last week. The Hong Kong Hang Seng Properties Index, which includes the city's biggest developers, has declined 18 per cent this year versus a 12 per cent drop in the benchmark. Developers focusing on residential real estate such as Sun Hung Kai Properties have fared better than commercial landlords.
Despite the political and economical uncertainty, would-be buyers lined up to bid on 94 apartments in The Campton project in central Kowloon, with prices starting at HK$6.8 million (S$1.2 million) for a one-bedroom condo. All but one of the units were snapped up in eight hours, bringing in HK$880 million for the developer, China Vanke.
Last month, Sun Hung Kai Properties was also known to have sold 97 per cent of its 298 apartments worth almost HK$2 billion in one day.
Data show that property prices have surged 230 per cent since 2000, bolstering the view of many Hong Kong residents that property will always be a haven. Despite a contracting economy, existing home prices have risen 1.2 per cent this year, and are the highest since November.
In the long-run, limited supply, high demand stemming from a low rate of home ownership and close-to-zero interest rates will support the market, according to a Morgan Stanley report dated May 26 by analysts including Praveen Choudhary.