Second Wave

February 9, 2007

2007 has started with a buoyant note in the back drop of strong local economy, high-flying stock market and a tight luxury property market. With more people joining the ranks of billionaires, demand for super luxury properties is reaching an all time high.

Buyers of big houses and huge apartments consist largely of well-heeled investment bankers. stockbrokers, lawyers. accountants and business proprietors. However. there are also a troop of buyers who (for most of the time) prefer to remain low key in their home hunt in the upscale locations like The Peak. Deep Water Bay, Repulse Bay and Jardine’s Lookout. They are the younger generations of the old, wealthy families of Hong Kong. With most of the incumbent rulers of these family businesses nearing retirement, the younger siblings are starting to take the reign in new style. Many of these people are also building families of their own; hence the need for bigger space arises. These buyers will not settle for the average luxury properties; they target huge apartments and houses over 3.000 square feet in prestigious locations. The age of a building is not a key concern but the design and style are essential considerations. Also included in the equation is “who lives next door”. For people from the older and more established families this seems far more important in showcasing their social status. As a result, locations mentioned above are ever popular.

On the leasing front, tenants are facing tough times negotiating with their landlords in the run up to lease renewal. Rents have increased across the board but many companies have not upgraded their housing budgets to the same tune, 2007 is the last year when all the old leases under statutory rental protection will expire. Many tenants are caught out by the sudden rental hike and are frustrated that renewal or relocation will cost equally dear. In recent months, properties in the rental brackets of $70,000 to $100,000 are particularly short of supply due to the reshuffle. It appears that the traditional high season of leasing market (May to July) may have been brought forward.

By Claudia Hui