HK's luxury homes in short supply: Swire Pacific

(HONG KONG) Swire Pacific Ltd, which is building architect Frank Gehry's first Asian residential project, said luxury homes in Hong Kong are in short supply as mainland Chinese buyers swooped for apartments.

'There is relatively short supply at the high end,' Martin Cubbon, an executive director of the company and chief executive officer of unlisted unit Swire Properties Ltd, said. There is 'enormous liquidity and buying' from Chinese residents, he told reporters here.

Luxury home prices in Hong Kong have climbed as much as 28 per cent in the first nine months of the year, as low mortgage costs and interest rates on savings deposits fuelled buying, Colliers International Ltd said. The project designed by Pritzker Prize-winning Mr Gehry may be rented at record rates, Swire's Mr Cubbon said.

The 'dynamics are all very positive' for Hong Kong's residential market, he said. Swire rose 0.7 per cent to close at HK$89.05 in Hong Kong trading. The stock has surged 67 per cent this year, beating the benchmark Hang Seng Index's 46 per cent advance.

Average luxury home prices may rise by between 5 and 10 per cent in the next 6 to 12 months, Ricky Poon, executive director of residential sales at Colliers, said.

The Gehry-designed project will have one apartment with an area of about 6,000 square feet (557 square metres) on each floor, Swire said. The 12-storey apartment block will be built on Stubbs Road in the Mid-Levels district by 2011, the company added.

Swire isn't selling the apartments because the company considers the site a 'family heirloom', Mr Cubbon said. Swire bought the site in the 1940s and built the first home of its group's director there, according to the company.

The project will have a 'modest' cost, Mr Gehry told reporters at the same briefing, declining to give specifics. 'It's a folklore that my buildings cost a lot of money.' Mr Gehry's past projects include the Museo Guggenheim Bilbao in Spain.

Sun Hung Kai Properties Ltd, the world's biggest developer by market value, is seeking to sell penthouses at its Cullinan project for HK$75,000 (S$13,640) a square foot. That would make the homes the world's second-most expensive, Xavier Wong, Hong Kong-based head of research at Knight Frank, said on Sept 17.

While office rents in Hong Kong are 'plateauing', the outlook for retail property is 'encouraging', Swire's Mr Cubbon also said.

'We've seen a genuine sign of renewed consumer confidence at the local level,' he said. Swire, the biggest commercial landlord in eastern Hong Kong Island, has a 97 per cent occupancy rate for its office properties and all its retail space has been leased, he added. -- Bloomberg

Source: Business Times, 1 Oct 2009