Knight Frank: Hong Kong remains world’s most expensive residential market despite slowdown

Analysis over a five-year period shows that, despite average prices continuing to rise since 2014, the top price ever achieved in Hong Kong was back in 2016 when a home on The Peak sold for US$28,154 per sq ft (US$303,051 per sqm) for a total of US$38.3m. Since then, the top price for a home has dropped by 16%.

London and New York remain dominant ultra-prime markets taking second and third place in the Knight Frank rankings with average prime prices currently standing at $3,022 and $2,989 per sq ft respectively. What is surprising about the London market however is that despite prime prices falling by 7% between 2015 and 2017, a record sale of US$15,184 per sq ft (US$163,440 per sq m) was achieved in 2017, 35% above the top price ever achieved in New York back in 2015.

Liam Bailey, global head of research at Knight Frank explains:

“Back in 2011, I made a somewhat controversial prediction that the top of the prime London residential market would see sales reach £10,000 per sq ft within a decade. A single sale in 2017 at well above £11,000 per sq ft justified my optimism.

“The impetus behind my exuberant forecast was research from The Wealth Report. Year-on-year, it was becoming increasingly clear just how much the growth of globalised wealth was shaping global property markets and propelling demand for the very best assets at new levels.”

Dubai remains the most affordable market of those analysed with an average price of US$625 per sq ft (US$6,729 per sq m), just 15% of the average price in Hong Kong. It has nevertheless seen some of the highest price premiums. In 2014 at the peak of the market, one sale achieved US$3,976 per sq ft (US$42,796 per sq m), the fourth highest price achieved in any one location that year.

Singapore has seen its highest achieved price remain relatively stable year-on-year, while the average prime price appreciated by 17% between 2014 and 2018. However, with many Singaporeans living in public housing the market for private homes is smaller, and with lower levels of demand come fewer high premiums.

Across the 10 cities surveyed, the differential between the average and top price achieved is just under 200%. Over the last five years, the gap has been largest in Hong Kong, a difference of 624% in 2016. However, uplifts of a similar magnitude were echoed in Dubai in 2014 and Miami in 2015.

The uplift is lowest in Paris and Singapore, with five-year averages of 30% and 39% respectively. This may reflect the fact that these cities sit in the middle of the price spectrum while the most dramatic uplifts are typically seen at the far ends – in those cities with the lowest or highest prices.

james.wallace@realassetmedia.com