Feb. 6 (Bloomberg) -- Sales of Hong Kong luxury homes rose to their highest in six months in January, indicating that prices may have stabilized as buyers seek bargains, according to data by Centaline Property Agency Ltd.

Completed transactions of existing properties increased 31 percent from December, and the value of the deals rose 9 percent to HK$2.7 billion ($348 million), the highest since July, the Hong Kong-based property broker said yesterday. Luxury homes are those valued at more than HK$10 million.

A lack of supply and lower prices bolstered sales of existing luxury homes amid a deteriorating outlook for Hong Kong’s property market as a recession hurts sentiment. Prices for luxury homes dropped 19 percent in the fourth quarter from the preceding three months, Marcos Chan, an analyst from Jones Lang Lasalle said, today.

“Since the meltdown of the financial markets in the fourth quarter, it’s no surprise to see a rebound after a sharp drop” in prices, said Chan, head of research for the Pearl River Delta at Jones Lang Lasalle. “Most buyers are those with old money and who hardly need to get financing from banks.”

Billionaire Joseph Lau, chairman of Hong Kong developer Chinese Estates Holdings Ltd. and the city’s fifth-richest man, spent HK$170 million buying a 5,657 square foot duplex, local newspaper Ming Pao said yesterday, citing unidentified people. The price is about 16 percent less than what the seller had paid. Alison Yeung, a spokeswoman for Chinese Estates, declined to comment on the report.

‘Rejuvenating Activity’

A total of 144 transactions were completed in January, the Centaline report said. The data excludes new properties released to the market last month.

January was the second straight month that transactions for existing luxury homes rose, posting a cumulative increase of 82 percent, Wong Leung-sing, an associate director at Centaline, said in the report.

“With the lack of new luxury homes, buyers are turning to the second-hand market, rejuvenating activity there,” he said.

Sun Hung Kai Properties Ltd., Hong Kong’s biggest developer by value, said it expects to fetch HK$50,000 per square foot for its three-storey penthouse units at a new property, the Hong Kong Economic Times reported today, citing a company executive.

The Cullinan

Buyers from China, Australia, Europe and the U.S. have expressed interest in the pre-launch sale of the penthouses, the paper said, quoting Victor Lui, executive director of Sun Hung Kai Real Estate Agency.

Almost 60 percent of the interested buyers for the property, called The Cullinan, are from China, Lui was quoted as saying. His comments were confirmed by Sun Hung Kai spokeswoman Karen Wong. Located in Kowloon, the 270-meter The Cullinan will be Hong Kong’s tallest residential project and includes 825 units.

Overall, January home sales in Hong Kong gained 3.6 percent from December, the Land Registry said this week. The number of residential units sold last month totaled 4,875, a 67 percent drop from a year earlier. The figure includes new and second-hand public and private housing.

More Pressure

Still, it’s “too early” to say that the luxury property market has stabilized, Jones Lang’s Chan said.

“We will continue to see pressure this year, whether it’s luxury or mass market real estate, as there are still uncertainties in the economy and unemployment will shoot up,” he said.

Hong Kong’s economy last year slid into its first recession since 2003, as the global recession hurt demand for exports and domestic consumer spending. The economy shrank a seasonally adjusted 0.5 percent in the third quarter of 2008 from the previous three months, after contracting 1.4 percent in the second quarter. Figures for the fourth quarter are due Feb. 25.

The unemployment rate in the city rose 4.1 percent in the three months ended Dec. 31, the highest level in 15 months.

Total sales of luxury homes fell in January, to 249 transactions, primarily because far fewer new units were sold, the Centaline report showed. In December, 319 transactions were recorded, and in January 2008 the number was 720.

Sales of new luxury homes fell 50 percent in January to 105 transactions, worth HK$2.4 billion, 39 percent less than December, the report showed.

To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net

Last Updated: February 5, 2009 23:10 EST