Hong Kong Property: Record Price Per Square Foot Smashed...Twice...By The Same Buyer

Tyler Durden's picture

Two weeks ago, we discussed Algebris Investments’ analysis of the world’s biggest asset bubbles. Portfolio manager, Alberto Gallo, noted that “It’s not just about valuation, it’s about irrational behaviour” and used variety of measures to identify the latter including ”Sky is the limit”, “Bidding wars” and “The trend is your friend”. Gallo listed what in his opinion were the fourteen biggest bubbles across the globe which included Hong Kong property, obviously.

In the global league table, Hong Kong held on to the dubious accolade of being the world’s most expensive place to live for the seventh year in succession in 2017, as Forbes noted, quoting work by Oxford Economics.

Holding on to its rank as the most expensive housing market in the world for the seventh year in a row is Hong Kong.

 

The median home price was 18.1 times the median annual pretax household income last year, according to a recent annual report from Demographia. Though a small improvement from the year before when home prices were 19 median household income, Hong Kong still ranks as "severely unaffordable" the report said.

 

The city's housing prices have skyrocketed in recent years, driven by low interest rates and mainland Chinese buyers. Lack of affordable housing has become a top social issue as the city's poor crowd into "cage homes" and dangerous, subdivided apartments.

To cement its leadership position in the realm of obscene property valuation, the South China Morning Post (SCMP) notes that the record price per square foot for a residence in Hong Kong has just been smashed…twice…by the same buyer…for two apartments in exclusive “The Peak” district. 

Mount Nicholson, the luxury housing development atop Hong Kong’s highest elevation, has clinched the crown as the priciest address in the most expensive residential market on earth, selling two apartment units for HK$1.16 billion (US$149 million) to a single buyer.

A buyer paid HK$600 million, or HK$131,000 per square foot, for a property measuring 4,579 square feet at Mount Nicholson, according to Wheelock Properties, which oversees sales of the joint project between Wheelock & Co. and Nan Fung Development, without divulging the buyer’s identity.

The same buyer splurged another HK$560 million on the same day on a second flat measuring 4,242 sq ft, or about HK$132,000 per sq ft. In square footage terms, the second property is the most expensive residence in Asia.

“From the perspective of an ordinary Hong Kong resident, we’ll never understand why” the city’s wealthiest people pay such sums for homes, said Knight Frank’s head of valuation and consultancy Thomas Lam.

As the SCMP laments, Hong Kong’s new Chief Executive is facing a losing battle in providing affordable housing and containing the bubble.

The prices of Hong Kong’s private housing advanced in September for the 18th consecutive month to a record, underscoring the challenges facing Chief Executive Carrie Lam Cheng Yuet-ngor, as she puts housing front and centre as the most important policy priority in her four-month-old administration. In her maiden policy address to the city, she pledged to create a “Starter Home” scheme to increase home ownership in the city for first-time buyers.

The transactions at Mount Nicholson, comprising 19 detached houses and 48 flats over three phases, broke the city’s previous price record, when a buyer paid HK$105,000 per sq ft for a HK$522 million duplex penthouse at Henderson Land Development’s 39 Conduit Road project at the Mid-Levels.

Hong Kong’s private home prices have increased by 430 per cent since 2003, making it the world’s most expensive urban centre among 406 cities to buy a home in, according to the Demographia International Housing Affordability Survey.

For the time being, Carrie Lam’s plan has about as much chance as that of King Canute.
 

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Déjà view's picture

Not The 'Peak'! QE infinity...

Laowei Gweilo's picture

it's literally 10x peak Vancouver luxury square footage (and still at least 5x peak Greater Van housing peak SQFT)

it's stupid here too but it's #s like these that remind me that average Van values (not growth) are barely 94th worldwide and even cheaper than Detroit averages -- let alone this craziness out of HK lol

also kinda scary about what's going to come next tho hhhh

Déjà view's picture

Hang $450m $ painting in garage...

Laowei Gweilo's picture

ain't no room for that in a Hong Kong garage!

ebworthen's picture

Hot money leaving mainland China.

deoldefarte's picture

IMHO some desperate China billionare that wants to preserve some of his wealth,

by moving it to "Chinese territory" of Hong Kong.

This  may be like those Saudi Arabia Royals that had 80% of their wealth confiscated

by the state.

 

 

FlKeysFisherman's picture

Works out to $16,898 per square foot.

Yellow_Snow's picture

Just another sign of Hyperinflation starting to rear it's ugly head

buzzsaw99's picture

i've heard there are some nice long hiking/running trails in the hills around hk.  yeah, i could see paying $600M for easy access to that.  /s

williambanzai7's picture

Certainly a lot more than I pay.

Grimaldus's picture

So waterfront must be cheaper than hilltop???

HK is like one big giant designer shopping mall and it is hard to find the budget places!

Sure did enjoy my couple of visits.

 

 

 

 

Grimaldus

pc_babe's picture

HK is a human warehouse.