High-net-worth investors looking at global prime property markets will get less square footage for their money than almost anywhere else.
In Knight Frank’s latest Wealth Report, which focuses on prime property markets across the globe and hones in on some of the key issues and influencing factors, the overriding message is that investors should be looking past current economic headwinds and “beyond the permacrisis”.
Across many of the world’s major economies, including the UK, inflation and rising interest rates are creating some difficulties. Liam Bailey, global head of research for Knight Frank, believes market sentiment will “shift quickly” later this year, and investors should be prepared to take advantage of opportunities.
Honing in on the performance of the Hong Kong prime property market over the course of 2022, the location ranked in 89th place out of 100 cities in terms of its property price growth, registering a decline of -1.6% in its prime residential market.
Despite this, though, it is second only to Monaco when it comes to how much square footage you can get for your dollar – and this is the 11th year running that Hong Kong has retained its position as second most expensive in the world.
Buyer appetite for Hong Kong prime property
In Hong Kong’s prime residential space US$1m gets you around 22 square metres in Hong Kong, compared with just 17 square metres in Monaco. This is followed by New York, where you could get an average of 33 sqm, and Singapore where the same figure gets you 34 sqm, which is the same as in London.
However, it seems that demand is still relatively strong for luxury property in Hong Kong, with 125 super-prime (US$10m+) and 28 ultra-prime (US$25m+) sales taking place there in 2022, putting it in fifth position overall.
The city with the highest number of sales in Knight Frank’s report was New York, which recorded a huge 244 super-prime and 43 ultra-prime sales last year. This was followed by Los Angeles (225 super-prime, 39 ultra-prime), London (223 super-prime, 43 ultra-prime) and Miami (146 super-prime, 23 ultra-prime).
Knight Frank’s Martin Wong explains the ongoing appetite in Hong Kong: “Due to limited existing and future supply, buyers are still seeing Hong Kong’s luxury homes as trophy assets.
“Current owners, on the other hand, usually have strong holding power and are not under pressure to dispose their assets. This supported the luxury home prices when the market was in trough and further uplifted the prices when the market was towards the peak.”
Local buyers still interested
It seems that ultra-high-net-worth individuals in Hong Kong – those with a net worth of at least US$30m – are still extremely keen on acquiring prime property as an investment option, and Knight Frank’s survey found this was the top asset acquisition option among this buyer group for 2023.
Martin Wong, Head of Research and Consultancy in Knight Frank Greater China, said: “Looking ahead, we would see substantial growth in investment volume as UHNWIs become more experienced in diversifying their portfolio, especially in the post-Covid era when everyone is trying to compete for first-mover advantages.
“Private buyers in Hong Kong are taking advantage of the ongoing repricing of assets and stronger currency positions. Residential premises remain the most preferable property investments for UHNWIs in the Greater China region.”
The report noted that investors were also drawn to London as an investment location for prime property due to the standards of education on offer there. Other cities in the UK continue to compete with the capital in this respect, though, in particular Manchester and Birmingham which attract large numbers of overseas students.
London was also the top city for cross-border private capital in 2022 for prime property, ahead of Singapore and Berlin, and Knight Frank expects this to remain the case in 2023.
