Primary Market Surge: Mainland Buyers Flock to Kai Tak, Sparking an Explosion in Transaction Volume!

According to data from the Midland Realty Research Centre, the total transaction volume for primary properties this year (as of November 21) reached 15,546 cases, involving an amount of HK$186.07 billion. This represents an increase of 45.6% in volume and 47.5% in value compared to last year's total of 10,650 cases and approximately HK$126.19 billion. The average transaction amount for primary properties across Hong Kong this year is HK$11.97 million, which is an increase of about 1% from last year's average of HK$11.85 million.

This indicates that the primary market has seen a comprehensive year-on-year increase in terms of "transaction volume," "transaction value," and "average amount per transaction."

When the transaction volume was breakdown by Hong Kong Island, Kowloon and New Territories and Hong Kong Island is the champion growth which got close to 4 times high than 2023’s 541 cases.

Kowloon transaction volume was second place to get 7,008 transactions which higher than 65.5% of 2023’s 4,235 cases. 6,396 transactions were found in New Territories slightly higher than last year by 8.9% (2023’s 5.874 cases). This shows buyers or investors preference to hunt urban flats especially the low-price strategy setting by developers in 2024.

The most popular area for primary market this year is the Kai Tak area. According to the Sale of First-hand Residential Properties Electronic Platform," as of November 17, the transaction value in Kai Tak amounted to HK$39.2 billion, the highest among all regions. Notably, the project "Cullinan Sky - Phase 1" alone has generated over HK$10 billion in sales this year, followed closely by projects such as "Pano Harbour," "One Victoria," "Cullinan Harbour-Phase 1," and "The Pavilia Forest I." The average transaction amount in Kai Tak is approximately HK$14.95 million, higher than the overall average of HK$11.97 million.

The second highest transaction value for primary properties this year is in the Hong Kong Island South and Ap Lei Chau areas (including Wong Chuk Hang), with a total of about HK$21 billion. The average transaction amount in this area is HK$18.61 million, significantly surpassing the overall average of HK$11.97 million. Specifically, the BLUE COAST series of railway properties in Wong Chuk Hang has recorded over HK$14 billion in sales, followed by projects such as "The Corniche," "La Marina” and "The Southland."

In third place for first-hand investment attraction is Ho Man Tin, with HK$17 billion in transactions and an average amount of HK$17.81 million per case. Among these, the "ONMANTIN" series near Ho Man Tin Station has been the strongest performer, with phases IIA and IIB totaling over HK$9 billion.

In recent months, positive news regarding the economy and the property market has been frequent, prompting not only general investors and users but also mainland buyers to noticeably accelerate their entry into the market. Mainland buyers have always had a strong preference for Hong Kong residential properties, and the luxury property market has become more active recently. Among the transactions, many mainland buyers are seizing the opportunity to purchase larger properties at "lower prices," including high-end luxury apartments and houses, with similar transactions occurring frequently.

According to data by the Midland Realty Research Centre, an analysis based on the names of known buyers shows that in October this year, there were 1,052 residential transactions from mainland buyers in the private property market, a sharp increase of over 78% from September's 590 transactions, marking a five-month high. Additionally, the proportion of individual buyers from mainland China rose from approximately 20.9% in September to about 23.6% in October, also reaching a five-month high. From Jan to Oct, overall private residential transactions were 46,603 and 9,185 of them were mainland buyers, occupied 19.7% of total transactions.

What areas are mainland buyers particularly interested in? Generally, they prefer regions near universities and relatively newer residential developments. For instance, in the Kai Tak area, among the top ten new developments with the highest number of transactions from mainland buyers in October, the most popular project was " Cullinan Sky," which recorded 119 cases for the month, accounting for about 45.6% of the personal buyers for that project. The second most popular project among mainland buyers was " The Pavilia Forest I," also located in Kai Tak, with 54 transactions, representing nearly 59%. As at October, there was total 2,146 primary private residential transactions in Kai Tak area,and occupied 31% of total transaction (7,008) in Kowloon district.  

According to 2021 Population Census Statistics (Provided by the Census and Statistics Department), resident population was 42,551 in Kai Tak area and 45.2% (~19,233) were non local residents from Mainland, Macao or Taiwan. From 2024 to 2026, around 20,900 units for public sector will be provided by Housing Society and Housing Authority and non local residents population will be kept increasing in coming years and will make synergy effects with private sectors to attract more mainland buyers living in Kai Tak to build small community. Based on Our Hong Kong Foundation information, total around 12,866 private flats will be produced in 2023 to 2026 and absorbed 2,846 units in 2023 to 2024 October, some worried about how many years to absorb remaining 10,000 units in coming two years. I based on past private primary transaction at Kai Tak in 2016 to 2023 and found that 2,967 and 2,619 transactions in 2017 and 2021 respectively, then I used 2,967 units for yearly absorption and then around 3.4 years to digest all primary units in Kai Tak development area.

From the end of December 2022 to the end of September 2024, various "talent schemes" received over 380,000 applications, with nearly 240,000 cases approved. From the beginning of 2023 to the end of September this year, as many as 196,000 talents have come to Hong Kong, with 158,000 of them now employed long-term in Hong Kong. With the government's "talent acquisition" initiatives gaining momentum, the potential rental and buying power of mainland buyers is quite significant, which will likely drive the property market recovery in the future especially Kai Tak development area where mainland buyers will actively look for it in primary market and leasing market. In the long run, investors enjoy high yield of flat rent and may have buffer to sell higher in the future.