The luxury condominium market rode a strong wave of recovery in 2010. New projects that were launched saw a reasonable take-up rate and a few existing projects that were put in cold storage during the financial crisis found buyers for multiple units. As such, land-hungry developers started hunting for development sites in the prime districts again. By end-2010, it was clear that interest in luxury homes had returned and looked set to continue in 2011. As response to new launches in the mass and mid-tier segments picked up in the second half of 2009, developers began to test the market with new luxury projects. Transactions last year showed that luxury prices recovered some 20 % from end-2009 levels but were still about 10 % below the 2007 peak. Institutional investors seized the opportunity to acquire multiple units in existing developments and projects that were nearing completion. Rents in the prime residential districts (Core Central Region) have recovered by 18.6 % from end-2009 levels and will likely remain firm for the rest of the year. Buyers who are looking for rental return will have to be content with a 2-3 % yield on luxury homes based on current price levels and rental rates. Another 8,400 new homes are expected to be completed this year, with 440 units coming from luxury projects such as The Marq On Paterson Hill and Cliveden At Grange. Competition for top grade rents will be keen. As such, those who are buying luxury properties this year should be prepared to hold on to their units for three to five years before considering selling for capital gains. The volume of luxury transactions this year is likely to be around 150-200 units with prices averaging at $3,000 psf and $3,500 psf for resale and new projects respectively (equating to a 5-10 % increase).
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