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Hong Kong's secondary property market is weak: Aegean Coast and The Empire. Royal Palace Case Study
The Hong Kong property market has entered a period of adjustment in recent years, with sluggish transactions in the secondary market. Even after being held for many years, the appreciation of some properties is far lower than during previous peak periods. This article uses Tuen Mun Aegean Coast and Olympic Station Empire Peak. Taking two transaction cases of Royal Palace as examples, this paper explores the current market conditions, investment return reality, and potential factors affecting property prices.
Case 1: The price per square foot of a three-bedroom apartment with sea view in the Aegean Coast dropped to HK$8,865
Unit C on the middle floor of Block 2 of Aegean Coast in Tuen Mun was recently sold for HK$5.47 million. It has a saleable area of 617 square feet and a price per square foot of approximately HK$8,865. This is a three-bedroom unit facing southwest with sea views and tastefully decorated for a certain appeal. The property was initially priced at HK$6.2 million and after it was put on the market, it attracted buyers from the same estate who were looking to change homes. The buyer took advantage of the low housing prices to enter the market and after bargaining, the price was finally reduced by 730,000 yuan, a reduction of 11.8%.
The original owner purchased this unit for $5.5 million in November 2012 and held it for more than 12 years, with a book loss of only $30,000, a drop of less than 1%. On the surface, the loss seems small, but if inflation, transaction costs (such as stamp duty, commission) and property maintenance costs are taken into account, the actual loss may be as high as 300,000 yuan. According to the valuation of BOC Online Banking, the current value of the unit is approximately HK$5.43 million, while Hang Seng Bank's valuation is HK$5.56 million, indicating that the transaction price is within a reasonable range, reflecting that the market valuation of such units has stabilized.
Case 2: Emperor Peak. The studio unit at the Royal Palace was sold for 5.3 million, with an increase of less than 10% in 15 years
Another transaction came from Olympic StationEmperor Peak. Royal PalaceRoom D on the middle floor of Block 6, an open-plan unit with a saleable area of 333 square feet, was sold for HK$5.3 million, with a price of approximately HK$15,915 per square foot. The unit faces south and has a wide view. The original owner asked for $5.8 million and was approached by an investor three months after it was put on the market. It is worth noting that the unit is currently tenanted and the buyer was unable to inspect the property on site. However, due to the affordable price and its investment needs, the buyer still decided to purchase it for $5.3 million including the lease, a reduction of $500,000.
The original owner purchased this unit for $4.841 million in July 2010 and held it for 15 years, making a book profit of $459,000, an increase of only 9.5%, far below market expectations. Huang Qinglong, senior regional director of Hong Kong Property, pointed out that this transaction was made at market price. The unit currently has a monthly rent of HK$16,500, which means that the new buyer can enjoy a rental return of approximately 3.7%. If the rental income from the past 15 years is taken into consideration, the overall return for the original owner should be more than the 459,000 yuan on the books, but even so, the appreciation rate is still weak compared with the golden period of the real estate market in the past.
Regional comparison: Olympic Station vs. Northeast New Territories: a stark contrast
Although they are all open-plan units, their performance in different locations varies significantly. Refer to the transaction records in 2023:
| area | Typical Price Per Square Foot | Average holding period | Rental yield |
|---|---|---|---|
| Olympic Station | 16,000-18,000 | 8.2 years | 3.1% |
| Tuen Mun | 12,500-14,000 | 4.5 years | 4.8% |
| Kai Tak | 19,000-22,000 | 6.8 years | 2.6% |
Analysis of the dilemma of Olympic Station
- Luxury housing area mismatch: Large housing estates in the area, such as Parkview Bay and Grand Harbour, are mainly for families, and open-plan units are difficult to integrate into the community positioning
- Competition from alternative products: At the same price, you can choose a one-bedroom apartment in Tung Chung (450 square feet, about 6 million), which attracts tenants who want to upgrade
- Infrastructure dividends exhausted: The opening of the high-speed rail and the hype of the West Kowloon Cultural District have faded, lacking new positive stimulus
Market background: Why is the second-hand property market weak?
The above two transactions reflect the common phenomenon in the current secondary property market in Hong Kong: there is great pressure for price reduction, and holding the property for many years may not necessarily record a significant increase. The reasons can be analyzed from three aspects: macroeconomics, policy environment and market supply and demand.
- Economic environment and interest rate impact
Since 2022, the world has entered a cycle of interest rate hikes. As an economy with a linked exchange rate system, Hong Kong has followed the pace of US interest rate hikes, and HIBOR (Hong Kong Interbank Offered Rate) has repeatedly hit new highs. The rise in mortgage rates directly increases the cost of home ownership and reduces buyers' willingness to enter the market. For investors, the high interest rate environment also weakens the attractiveness of property investment, as rental returns may not offset the impact of rising capital costs. For example, Difeng. The 3.7% return on the Royal Palace units seems good, but in a high-interest environment, it is still not outstanding compared to other financial products. - Policy Regulation and Market Confidence
The Hong Kong government has introduced a number of property policies in recent years, such as the Additional Stamp Duty (SSD), Buyer Stamp Duty (BSD) and Double Stamp Duty (DSD), which have increased transaction costs and curbed short-term speculation. At the same time, the government relaxed some mortgage ratio and stress test requirements in 2023, which stimulated transactions in the primary market, but had limited effect on the secondary market. Buyers tend to wait and see, while sellers are forced to reduce prices due to the sluggish market, resulting in greater room for negotiation. For example, the price of Aegean Coast units has been reduced by 11.8%. - Supply-demand imbalance and regional differences
Property transactions in Tuen Mun and Olympic Station showed obvious regional characteristics. Aegean Coast is located in Tuen Mun, which belongs to the New Territories West District. In recent years, it has benefited from infrastructure development (such as the Tuen Mun-Chek Lap Kok Link), but the overall secondary market is still affected by the competition from a large number of new properties. Buyers have more choices and the bargaining pressure on old properties has intensified. In comparison, Difeng. The Royal Palace is located at the Olympic Station in Kowloon, a core area in the city with convenient transportation and complete living facilities. However, the demand for open-plan units has declined in recent years, and young buyers prefer one-bedroom or two-bedroom units, resulting in limited appreciation potential for such units.
Return on investment analysis: the gap between book and actual returns
From an investment perspective, the returns in both cases were unsatisfactory and highlighted the difference between book profits and actual returns.
- Aegean Coast: Holding the property for 12 years and losing 300,000 yuan
The Aegean Coast unit's book loss was only $30,000, but the actual return needs to take into account a number of hidden costs. Based on the inflation rate from 2012 to 2025 (assuming an average annual inflation rate of 2%), the purchasing power of 5.5 million yuan has depreciated by approximately 30%, which is equivalent to a loss of approximately 1.65 million yuan. In addition, expenses such as stamp duty, commission and property management fees involved in the transaction further eroded profits. If the unit had been rented out during the period, based on the average monthly rent of about HK$15,000 to HK$20,000 for a three-bedroom unit in Tuen Mun, the rental income over 12 years could have been between HK$2.16 million and HK$2.88 million, enough to offset the book loss and record a certain amount of income. However, after deducting renovation and maintenance costs, the actual return is still far below expectations during previous property market peaks. - Emperor Peak. Royal Palace: The increase in 15 years is less than 10%
Emperor Peak. The book value of the Royal Palace unit appreciated by 9.5%, which seems to be a slight profit, but the time cost of 15 years is extremely high. Calculated in terms of annual average rate of return, it is only about 0.6%, which is much lower than the bank deposit rate or the average return of the stock market during the same period. If rental income is included (16,500 yuan per month, about 2.97 million yuan in 15 years), the total income can reach more than 3.4 million yuan, and the apparent rate of return increases to about 70%. However, after deducting taxes, management fees and renovation expenses, the net return is still difficult to exceed 100%, reflecting the limitations of open-plan units in the current market.
Property market outlook: short-term adjustment or long-term trend?
Based on the above cases, it is difficult to be optimistic about the Hong Kong secondary property market in the short term. according toRating and Valuation DepartmentAccording to data, the housing price index continued to fall throughout 2024, and as of April 2025, there has been no obvious sign of rebound. Transaction cases in Tuen Mun and Olympic Station show that even for properties with sea views or urban advantages, prices still need to be significantly reduced to attract buyers to enter the market. For sellers, the situation where holding properties for many years without significant appreciation may force more owners to choose to cut their losses and leave, further exacerbating market supply pressure.
However, in the long run, the Hong Kong property market still has certain supporting factors. Firstly, the shortage of land supply remains the core issue. Although the government has accelerated the release of land, it takes time for new projects to be completed, and the secondary market still has a certain appeal. Secondly, as the global economy gradually recovers, if the interest rate environment turns loose after 2025, funds may flow back into the property market, driving prices to rise. In addition, the Hong Kong government is actively promoting the development of the northern metropolitan area and the Greater Bay Area. New Territories areas such as Tuen Mun are expected to benefit from favorable infrastructure, and the potential appreciation space is worthy of attention.
As the government promotes "simple public housing" and relaxes mortgages for first-time homebuyers, the small-sized housing market may see structural changes:
- Downside scenario(Probability 40%)
- 100,000 new units are available in the northern metropolitan area, further diverting tenants
– Open-plan unit prices to drop by another 10-15% per square foot by 2025 - Rampant Situation(Chance 50%)
– Developers convert nano buildings into shared apartments to increase rental income
– The government introduced a “vacancy tax” to force property owners to lower rents and stabilize the rate of return - Upside scenario(Probability 10%)
- The mainland’s relaunch of the “Talent Scheme” has attracted 200,000 talents to come to Hong Kong, stimulating rental demand
– Cryptocurrency speculators use small units as a channel for depositing and withdrawing fiat currency, giving rise to a short-term speculation craze
Investment advice: Enter the market cautiously and seize the opportunity
These two cases provide some inspiration for buyers who are interested in purchasing a property or investing. First, there is a lot of room for negotiation in the current market, and buyers can enter the market at a low price, but they need to pay attention to the property's rental potential and regional development prospects. For example, the three-bedroom apartment with sea view on the Aegean Coast is suitable for family living or long-term rental, while Difeng. The open-plan units in the Royal Palace are more suitable for short-term investors, who rely on rental returns to make up for the lack of appreciation. Secondly, before investing, you should fully calculate the actual costs and benefits to avoid being misled by book figures. Finally, pay close attention to policy and interest rate changes and seize the opportunity of market turns to find opportunities in weak market conditions.
Conclusion
Aegean Coast and Imperial Peak. The transaction case of Royal Palace vividly reflects the current situation of Hong Kong's secondary property market: price reduction, slowing appreciation and flat returns. Whether it is the three-bedroom units in Tuen Mun or the open-plan units in Olympic Station, owners who have held on to their properties for many years have failed to achieve ideal returns, indicating that the market has entered a period of adjustment from the previous high-growth stage. For buyers, this may be an opportunity to enter the market at a low level; for sellers, they need to re-evaluate their holding strategies. The future direction of the property market still depends on the speed of economic recovery, the intensity of policy adjustments and regional development potential, and is worthy of continued observation.
The small-unit market is transforming from a "speculative tool" to a "cash flow asset", and only active management can break through. As the Wall Street proverb goes, “There are no bad assets, only bad pricing strategies.”
Emperor Peak. Royal Palace Introduction
Emperor Peak. Royal PalaceThe HermitageHermitage MuseumCome), located inHongkongKowloonTai Kok TsuiHoi Wang RoadA private upscale residential estate at No. 1Olympian CityThe third phase consists of six buildings, providing 964 residential units, with the tallest being Building 1, which has 55 floors. Project bySino Land,Nan Fung DevelopmentandChinese EstatesThe housing estate was designed by Ma Liang Architects andTange KenshinResponsible for the detailed design, completed in February 2011, occupied in May 2011, the management fee is about $3.2 per square foot,Sino LandIts subsidiary "Emperor Peak·Huangdian Property Management Co., Ltd." is responsible for property management.
