Hong Kong property: sale of historic Pok Fu Lam mansion for US$26.5 million signals luxury market rebound after curbs lifted

“The residential market in Hong Kong has long been undervalued, and there is significant upside potential for Hong Kong as an international city,” said William Cheng Kai-man, chairman of Shun Ho Property Investments. Cheng is the son-in-law of tycoon Lee Shau-kee, who founded Henderson Land Development.

“We feel exceptionally privileged to have the opportunity to own and maintain Hong Kong’s most prestigious heritage building.

“This manor is not just of marvellous architecture, it also stands as a witness to the history and developments of Hong Kong in the last century. We are so honoured.”

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The mansion holds grade-three historic status and was built by William Ngar Tse Thomas Tam, a barrister and magistrate, in 1929 and named in honour of his wife, Jessie To Pui-Chun. The Italian Renaissance style house was restored and converted into four units by Samsbury Investment.

The acquisition provides an excellent investment opportunity for Shun Ho Property to expand and diversify its property investments in Hong Kong, according to its filing to the Hong Kong stock exchange on Friday afternoon.

The deal comes after the Hong Kong government announced the removal of all property purchase restrictions late last month, which has led to an immediate rebound in luxury residential transactions.

As of March 13, transactions for new residential properties of over HK$30 million reached 84 for the month, a 30-month high and more than three times the 18 units sold in the whole of February, according to Midland Realty.

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“The luxury residential market has directly benefited from the scrapping of cooling measures, leading to a significant increase in transaction volume,” said Buggle Lau Ka-fai, Midland’s chief strategist.

Late last month, Financial Secretary Paul Chan Mo-po scrapped all cooling measures restricting property transactions as he unveiled a budget aimed at restoring the city’s flagging fiscal health, addressing mounting calls from the property and business sectors to ditch the decade-old measures as lived-in home prices fell for a ninth straight month to a level last seen in 2016.

These include the Buyer’s Stamp Duty (BSD) that targeted non-permanent residents and a New Residential Stamp Duty (NRSD) for second-time purchasers. Homeowners will also no longer need to pay a Special Stamp Duty (SSD) if they sell their home within two years.

Hopes of a reduction in borrowing costs as inflation in the US slows are also fuelling optimism.

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“The removal of all cooling measures and the anticipated interest rate cut have unlocked the purchasing power of residential properties,” said Antonio Wu, head of capital markets at Knight Frank Greater China.

“We expect this to stimulate residential sales sentiment, attracting more local and overseas buyers, as well as investors, to make purchases. Given the limited supply and strong demand, we anticipate a gradual increase in luxury transactions.

“The tangible rarity of super-prime residential properties maintains their significant investment appeal, which may further drive an increase in unit prices.”