The volume of residential property sales in Hong Kong in May rebounded for the second month in a row as developers continued to offer buyers attractive deals on new schemes.

In total, there were 5,270 transactions in May, 10% higher than the previous month and the highest level of the past 15 months, according to the latest monthly report from Knight Frank. Within that, the number of luxury residential sales worth HK$10 million or above rose 17% month on month to 505 transactions.

Sales of secondary homes grew 20% from the previous month, as more owners were willing to offer discounts to compete with new build units offered at competitive prices, according to the report.

Another fillip to the market came in the middle of May when the government proposed a relaxation of the Double Stamp Duty. This made it easier for buyers of second homes to obtain a refund of the tax. Previously, buyers had to sell their first homes within six months of the second homes’ ‘sale and purchase agreement’ to be eligible for the refund.

Now, the six-month period starts from the ‘conveyance on sale’ for the second homes, giving buyers more time to dispose of their first properties.

Buyers of pre-sale new build flats therefore have up to 36 months to sell their first property in order to qualify for the rebate, the report points out.

The report also says that the Hong Kong government has begun to accept lower prices for its land, evidenced by the recent sale of a residential site in Tai Po for a relatively low accommodation value of HK$3,300 per square foot.

However, land in core districts remains highly valuable. For example, a small residential plot in Schooner Street in Wan Chai was sold to Hopewell Holdings for HK$233 million or an accommodation value of about HK$16,035 per square foot, making it the most expensive site in the district.

In addition, a residential site in Shouson Hill in Island South received an overwhelming response and fetched an accommodation value of about HK$30,888 per square foot, around 28% more than that fetched by a nearby site two years ago.
‘We expect the relaxation of the stamp duty requirement will boost buying sentiment and particularly benefit developers who are targeting buyers looking to move up the property ladder,’ the report says.

‘Transaction volumes are therefore expected to increase in the coming months. However, we expect the impact on prices to be limited because of other cooling measures still firmly in place,’ it adds.

The report also covers the commercial market and shows that during May 2014, the Grade-A office leasing market on Hong Kong Island remained stable, while office rents in Kowloon East further softened, due to increasing supply and the decreasing affordability of tenants amidst previous rental surges.

Meanwhile, retail sales continued to decrease in April, year on year, and the expansion of international brands further slowed. Recently, the market has been dominated by middle end retailers.