Hong Kong Is World's Most Expensive Place to Buy Home on Property Shortage
Hong Kong is 55 percent more expensive than London, based on an index published today by the property broker that compares the U.K. capital with the other cities. Moscow is 7.4 percent more expensive than London and New York is 15 percent cheaper.
Home prices in Hong Kong have been driven higher by record- low borrowing costs, a lack of new supply and an influx of Chinese buyers, Savills said. They have jumped more than 55 percent since the beginning of 2009, according to an index compiled by Centaline Property Agency Ltd., Hong Kong’s biggest closely held broker.
“Prices will continue to rise over the next year to 18 months,” said Simon Smith, the Hong Kong-based head of Asian real estate research, at a presentation in London yesterday.
In November, Hong Kong’s government stepped up a yearlong battle to curb inflation with additional taxes and policies. Chief Executive Donald Tsang pledged to make more land available to build 20,000 housing units each year and raised property taxes to deter speculators.
Hong Kong’s “government is trying to cool the market and isn’t doing a very good job of it,” Smith said.
The Hang Seng Property Index, which tracks the performance of the city’s seven-biggest developers, gained 76 percent from the beginning of 2009, after falling to a more than four-year low during the global credit crisis.
Savills compiled the data using estimates of what employees of a company would pay to relocate to each of the four cities. The index reflects home values for one chief executive officer, two directors and four administrative workers. The firm based its calculations on the price per square foot for each type of property the seven buyers would purchase.
An office worker would have to pay the equivalent of about 659 pounds ($1,050) a square foot for a home in Hong Kong, 76 percent more than their counterpart in London, Savills estimates.
World’s Biggest Developer
Sun Hung Kai Properties Ltd., the world’s biggest developer by value and owner of Hong Kong’s two tallest skyscrapers, has gained 31 percent over the past year. Cheung Kong (Holdings) Ltd., controlled by Hong Kong’s richest man, Li Ka-shing, and the builder of luxury housing projects including The Legend, has risen 45 percent during the same period.
Seventy percent of the Hong Kong land releases are in the New Territories, aggravating the shortage in desirable districts like Hong Kong Island, where there are only 2,400 houses, Smith said. New Territories and Hong Kong Island are two of the city’s three main regions. The other is the Kowloon peninsula.
Hong Kong also leads at the top end of the market, London- based Savills said. A home in The Peak, an exclusive neighborhood with only 500 houses, might sell for as much as 6,353 pounds a square foot. That’s more than double the price for a comparable property in Mayfair or Knightsbridge in London, the second-most expensive city for high-end homes, the Savills survey showed.
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