Hong Kong's property prices continue to surge upwards

One sector that remained robust throughout the recent global economic crisis was Hong Kong’s property market. In 2009, the market rose exponentially with home prices surging upwards by 30 per cent, while luxury properties leapt by more than 40 per cent. In November, US$56.5 million deal was signed for a penthouse apartment at a development on Conduit Road, making the 5,000 square foot apartment the world’s most expensive piece of pre-built residential property. So far in 2010, the sector’s growth shows no signs of abating, fuelled by the buying power of mainland Chinese, who have become one of the market’s major drivers of speculative investment.

Such growth has in turn led to an escalation in the amount of advertising used to market these new developments. The latest available statistics show that over $111 million was spent on property advertising throughout Hong Kong last year, equating to a substantial $8.8 million a month, which has catapulted property into the top three in terms of sector adspend.

However, not all is rosy for the Hong Kong property market, as the Government is clamping down on the sector’s misleading advertising and sales tactics, which contributed to last year’s price rises. The Hong Kong Transport and Housing Bureau now requires that developers are more accurate with square footage of the apartments they place on the market, as well as ensuring that floor numbering is accurate in all marketing material.

“The government is deeply concerned about some recent sales tactics in the first-hand uncompleted residential property market and confusing market information,” the Transport and Housing Bureau said. “The new measures will enhance the transparency of transactions of uncompleted first-hand properties and the clarity of property information.”

While the sector’s major players will now be double checking their campaigns, it won’t stop their unrelenting assault to attract investors’ eyes. According to media spend figures from advertising monitoring service adMango, the top five brands in the sector are Sun Hung Kai Properties, Midland Realty, Cheung Kong, Henderson Land Development, and MTR Corporation. Between them they spent more than $38.6 million marketing their properties during 2009.

Just as the developers compete for the best location at the property auctions, it seems their respective marketing teams and agencies are now attempting to outdo one another with eye-catching ads to stand-out from the clutter of property-related marketing.

Ads - usually lifestyle driven - appear daily in both local papers and those favoured by the expatriate community, with executions in English and Chinese. All the newspapers run property supplements which feature extensive advertising for new developments.

This medium, according to the adMango figures, is unquestionably developers’ preferred means to raise awareness of their latest developments.

Between January 2009 and February of this year, $85 million was spent on property advertising in newsprint across Hong Kong. This figure accounts for almost two thirds of the media split, with TV the next most popular platform garnering just over a 23 per cent share.

Outdoor, with the MTR subway in particular a popular place to catch the eye, is also utilised. One way to stand out is to use developments as advertising platforms, a method employed by Sun Hung Kai Properties, which unveiled a 3,600 square metre ‘building wrap’ campaign on its luxury development, the 95-storey The Cullinan.

Online advertising is growing in prominence with the developers too. Although it still has a long way to go to before newspaper ad salesmen need to worry, Sun Hung Kai recently launched a long term internet banner campaign on the popular AsiaXPAT website, which has over half a million regular users across Asia. Using the site to promote its Signature Homes ultra-luxury brand, the developer joins the likes of Jones Lang Lasalle, Savills and Sino Land in using the portal to target affluent foreigners.

Industry comment

Marcos Chan, head of research, Greater Pearl River Delta, Jones Lang Lasalle:
“For the sales market, feelings about growth and performance are still pretty strong. It’s an obvious story - interest rates are still very low in Hong Kong.

But there’s another story. The buyers’ profile in the Hong Kong market is also changing from purely Hong Kong to mainland Chinese. This is then backed up by a tight supply situation for the commercial and residential markets. Mainland Chinese buyers are attracted by the rarity of properties in Hong Kong — it’s iconic to own a luxury apartment. It gives them a certain kind of identity.

Many said the market would crash this year but prices are still going up. Capital growth was up 10 per cent in Q1 of this year. We’re expecting the next three quarters to also see an increase although not by as much.

From a residential point of view, the top players are Cheung Kong, Henderson Land Development, Sino Land and New World Development. The most talked about building last year was definitely New World Development’s residential project ‘The Masterpiece’ in Tsim Sha Tsui.

The Government has clamped down on advertising and sales techniques for Hong Kong’s property market, and this is not a bad thing. All it is trying to do is enhance the transparency of property transactions and the clarity of information. For example, developers are now required to publish any details of progressing or completed transactions when they put up a development for sale or leasing.

As far as advertising goes outdoor remains the dominant media to target would-be home owners and property investors. Using the press is increasingly popular now too.”

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This article was originally published in the 8 April 2010 issue of Media.