Hong Kong apartment sets new record price

Prices in Hong Kong's so-called luxury sector are up an estimated 30 percent this year.
A Hong Kong property developer has sold a duplex apartment for a world record price, less than three months after the territory technically emerged from recession.

Henderson Land, controlled by tycoon Lee Shau-kee, said it had sold the property on Hong Kong island for HK$71,280 (US$9,200) per square foot, or HK$439 million, to a buyer from mainland China. News of Wednesday’s sale came just hours after Donald Tsang, Hong Kong’s chief executive, echoed concerns “about the supply of flats, difficulty in purchasing a home and the possibility of a property bubble” in his annual policy address to legislators. “The government will closely monitor market changes in the coming months,” Tsang said. “When necessary, we will fine-tune the land supply arrangements … with a view to quickening the pace of bringing readily available residential sites to the market.” The government owns all the land in Hong Kong, the territory’s most precious resource, and releases plots for auction from a pre-approved “application list” only after a developer’s offer triggers a closely guarded reserve price. “If you want to maximize the value of land you don’t sell any — or at least very little,” says one local property executive. The Hong Kong government, which strenuously denies it enforces a “high land-price policy”, can also influence supply through its Urban Renewal Authority and MTR Corporation, the mass-transit rail operator that builds flats above its subway stations. Hong Kong technically exited recession in the second quarter, during which gross domestic product grew 3.3 percent over the preceding three months. The property market has also rebounded strongly, with prices in the so-called luxury sector up an estimated 30 percent this year. The market has been supported by the territory’s unique currency peg. The peg is maintained at HK$7.8 to US$1 and forces the Hong Kong Monetary Authority to track currently low U.S. interest rates, encouraging speculative flows into the property and stock markets. The benchmark Hang Seng index has risen 50 percent this year, and 95 percent from its low in March. Henderson Land’s record-setting property is on the 68th floor of a 40-storey building in the Mid-levels district — a marketing trick made possible by the developer’s decision to omit 47 floor numbers. Traditionally, only floor numbers considered extremely unlucky in Cantonese culture, such as “4” and “14”, are skipped.