Luxury property demand up amidst HK super-wealthy population growth

Increased transactions and family offices drive Hong Kong's high-end residential market.

Hong Kong's luxury residential market is experiencing a surge in demand, driven by the growth of the city’s super-wealthy population and a rise in family offices, according to Knight Frank. The number of high-value property transactions has increased following the Hong Kong government's removal of cooling measures earlier this year.

"So recently we have seen more luxury residential transactions occur in Hong Kong," said Martin Wong, Head of Research & Consultancy at Knight Frank Greater China. "Since the reboot of all the cooling measures in February this year, we have seen far more transactions than before. There's more demand from investors as well as from end users."

Wong highlighted a significant uptick in transactions for properties valued over USD $10 million, with 37 transactions recorded in the first quarter of the year, rising sharply to 62 in the second quarter. "This is a drastic increase, if you consider just Q1 to Q2," he added. 

The expansion of family offices in Hong Kong is also contributing to the rise in luxury property demand. "We see more family offices setting up in Hong Kong," Wong noted. "We have about 2,700 family offices currently set up in Hong Kong, and we expect that number could rise to 2,900 by the end of this year." 

However, changes in buyer behaviour are also shaping the global luxury property landscape. Christine Li, Head of Research at Knight Frank Asia-Pacific, noted a shift in preferences among mainland Chinese buyers, who have historically been significant players in gateway markets like Singapore, Australia, and Japan.

"Policy issues have really muted the demand for Singapore luxury homes because overseas buyers with no residential status must pay a 60% additional buyer stamp duty. That has dampened the demand from Chinese buyers,” Li stated. Additionally, the economic downturn in China has led to a decrease in mainland Chinese investments in holiday homes in Thailand and Malaysia.

Despite this, Li highlighted a "growing demand for gateway places like Australia, particularly Sydney and Melbourne," from wealthy Chinese buyers. "They are looking at sending their children overseas for further education, so those markets continue to see some resilience in terms of buying demand," she explained.

Looking ahead, Li noted a regional shift in wealth concentration, with new hubs emerging outside traditional markets like the US and UK. "There are signs that a lot of this wealth is reshuffling in the region," she said. "We are seeing the rise of a few super wealth hubs, including interest in the Middle Eastern market, particularly Dubai."