HONG KONG: Luxury-home sales in Hong Kong almost tripled in September from a month earlier, as mainland residents bought properties in the city.

The registered sales of homes worth more than HK$10 million ($1.3 million) rose to 1,351 from 500, according to a report from the Land Registry yesterday. In September 2008, 168 transactions were completed. A one-bedroom apartment in the Kowloon district sold for a record HK$24.5 million, Centaline Property Agency Ltd said last month.

Luxury-home prices in Hong Kong climbed as much as 28 percent in the first nine months as low mortgage costs encouraged buyers, according to Colliers International. Prices may rise by as much as 10 percent in the next 6 to 12 months, the property broker said last month.

"The luxury-home market is very active," Buggle Lau, chief analyst at Midland Holdings Ltd, said by telephone yesterday.

"Capital from the mainland and overseas is contributing."

There is "enormous liquidity and buying" from mainland residents, Martin Cubbon, an executive director of Swire Pacific Ltd, said September 29. Swire is the biggest commercial landlord in eastern Hong Kong Island.

"We probably will see consolidation after home prices, especially luxury apartments, jumped quite a bit," Credit Suisse analyst Cusson Leung said in a telephone interview.

That's because interest rates may have bottomed out, he said.

Shi Wing-ching, chairman of Centaline Holdings, the owner of one of the largest real estate firms in Hong Kong, said there are increasingly more mainland home buyers in the city and the trend is growing.

Mortgage rates in Hong Kong are the lowest in at least 19 years. Lenders have cut mortgage rates "to such an extent that they might not have given due regard to the reputation risk, interest-rate risk and liquidity risk potentially associated with their pricing," Hong Kong Monetary Authority Deputy Chief Executive Y.K. Choi said September 17.

"Average mortgage rates are going to pick up gradually," Peter Wong, head of the Hong Kong unit of HSBC Holdings Plc, said last week.

Hong Kong home prices as a whole may fall in the months ahead as Chinese investors face a slowdown in lending growth at home, reducing their buying power, said Leung at Credit Suisse.

"Mainland investors' appetite goes along with growth of liquidity in China, which has already showed signs of slowing down," he said.

China's banks extended 410.4 billion yuan ($60.1 billion) of local-currency loans in August, up from 355.9 billion yuan in July, according to official figures. New lending in September may fall to a range between 300 billion and 400 billion yuan, China Banking Regulatory Commission Chairman Liu Mingkang said yesterday.

A one-bedroom apartment at the Masterpiece development in Hong Kong's Kowloon district was bought for HK$30,025 a square foot last month, a record for a property of that type in the city, Centaline said. The home, with space of 816 square feet (75 square meters) was sold for HK$24.5 million.

The Hang Seng Property Index, with six major developers as members, has jumped 55 percent this year, beating the 43 percent increase in the benchmark Hang Seng Index. Sino Land Co, the best performer in the industry index, has surged 71 percent this year, while shares of Hang Lung Properties Ltd, Hong Kong's fifth-biggest developer by market value, has risen 69 percent.

China Daily/Bloomberg News

(HK Edition 10/07/2009 page4)