For the first time since 2012, London isn’t the world’s No. 1 market for luxury homes. Real estate executive Solly Assa, founder and developer of Assa Properties, reports that Hong Kong has surpassed London, thanks to its record number of sales contracts that exceeded $ 100 million in 2016. There are several reasons this real estate market is blossoming; the first one being due to the significant amount of built-up wealth among Chinese investors looking for a safe place to invest their capital.
According to a research done by Assa, four of ten properties with a price tag above $ 100 million, were sold in Hong Kong last year. London took second place after registering two contracts worth more than $ 100 million, while New York fell into third place.
The rise of the Hong Kong real estate market results from sudden disturbances that occurred in markets like the United Kingdom, which had to deal with elections, new taxes, and Brexit, said Solly Assa. Although the top luxury home market is on fire, the sale of cheaper luxury real estate properties has slowed down.
The sale of real estate with an asking price above $1 million has grown by one percent over the last year, which is a drop compared to the 8 percent jump in 2015, and the 16 percent increase in 2014, explained Mr. Assa in his survey.
The average time for a sale closing of a luxury property has been extended by about 13 percent, where in some markets the supply exceeds the demand. This year, Hong Kong reported the highest ever reported home price in the world. Namely, a buyer from China bought a property in Hong Kong for $360 million which he is now tearing down to build a single-family home where he plans to live with his family.
In Hong Kong, a great deal of the wealth is generated from real estate. In the past several decades, much of that was driven by technology and manufacturing, hence this shows that buyers are becoming more diverse. The luxury market shows little sign of cooling down in 2017, despite recent government efforts to try and control prices. According to Solly Assa, there are already a couple of nine-figure sales announced in Hong Kong this year.