HK's superluxury housing sector defies gravity

STILL AVAILABLE: The Opus project has not been fully sold two years after it was unveiled. Of its 12 units, nine are still held by the developer.


    Jul 24, 2014

    HK's superluxury housing sector defies gravity


    WHEN the Opus project was unveiled in 2012, its developer boasted that the apartments there, designed by star architect Frank Gehry, would be the most expensive in Hong Kong - and, by extension, probably the world.

    That year, the developer - Swire Pacific, a Hong Kong conglomerate - sold one of the 12 units for a record HK$455 million, then about US$58.7 million, making Opus an emblem of the city's superluxury market.

    Another unit was sold the same year for about US$55.5 million.

    It was the high-water mark of a boom time: From the 2008 financial crisis until last year, residential property prices in Hong Kong rose about 120 per cent.

    Last year, the government sought to cool the market with tighter mortgage rules and a higher tax aimed at some high-end buyers from outside Hong Kong.

    Still, at the beginning of this month, Swire announced that another Opus unit had sold for US$55.5 million (about S$69 million). The buyer was apparently local.

    The sale illustrated how seemingly bulletproof Hong Kong's superluxury housing market is, experts said.

    Prices have remained roughly the same even as the number of transactions has dropped, showing that developers and rich owners are happy to hang on to prized properties - even empty ones - as the rest of the market dips.

    "They have holding power," Thomas Lam, head of valuation and consulting at real estate service provider Knight Frank Hong Kong, said of wealthy investors.

    "For them, the holding costs are relatively low, and they don't need the rent. They can keep it empty. High-net-worth individuals already have other homes."

    Another high-profile complex is 39 Conduit Road, a 2009 development that like Opus has achieved sales records.

    Henderson Land, the developer of 39 Conduit Road, is valuing its Unit A penthouse at US$83.3 million. That price works out to $14,460 psf, which is significantly higher than Opus' most recent selling price of $10,257 psf.

    But the penthouse is not for sale. Gabriella Chow, a Henderson spokesman, said the home was empty and owned by the developers.

    For all the hoopla surrounding Opus when it opened two years ago, it remains partly empty. Of the nine remaining units that Swire holds, five are leased, three are available for rent and one is being held by the company, according to Lydia Tsui, a company spokesman.

    With Opus, Swire used a bidding system to avoid having to disclose a full price list, which would otherwise be required under a ordinance issued last year aimed at preventing backdoor dealings.

    Rather than list the units on the market, the company collected sealed offers from prospective buyers.

    The government does not have statistics on how many privately held properties are empty.

    But some newer luxury towers in popular districts like West Kowloon are dotted with undressed windows and empty living rooms.