"Luxury home sales are benefiting a lot from the ample liquidity in Hong Kong now," said real estate agent Raymond Li, whose team last week sold three houses worth HK$190 million to two investors in the city's Mid-Level and Southern district. "Hong Kong stock market is doing really well, so we are expecting a further rise in sales."
Agency Centaline said sales of homes worth more than HK$12 million jumped in the first quarter to their highest since late 2012. With a new supply of 3,100 luxury units from developers such as Sun Hung Kai Properties (0016.HK) and Swire Properties (1972.HK) due on the market this year, it expects the boom to continue.
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'Park the money'
The upturn in the high-end sector follows the city government's latest effort to curb speculative property demand. Targeted at smaller homes priced below HK$7 million, that move would mostly affect the city's middle-class buyers, analysts say.
But luxury home prices in the city have already risen about 5 percent so far this year, versus previous industry forecasts of up to a 5 percent drop in 2015.
"The wealthy in Hong Kong need to find a place to park their money, so they are all rushing into buying luxury homes," said Centaline research director Wong Leung Sing.
A downturn in China's real estate market also sent more mainland buyers back to Hong Kong to seek safer investments, said Thomas Lam, head of valuation & consultancy at Knight Frank. Consultant Knight Frank recorded a 60 percent year-on-year rise in luxury house sales for the first four months of this year.
Though investments by mainland buyers in Hong Kong are rising, the trend isn't enough in itself to tip China's real estate business into further trouble since the numbers remain well below previous levels.
According to Knight Frank's Lam, up to 10 percent of buyers in the high-end sector are mainland Chinese. They once accounted for as much as 30 percent to 40 percent of the city's luxury home sales, he said.