Houses on Hong Kong’s outlying islands, which are 40 per cent cheaper than their urban counterparts, are enjoying a surge in popularity as a shift to home-working during the coronavirus pandemic changes the priorities of potential buyers.
The number of homes changing hands on islands like Lantau, Tung Chung and Lamma, has shot up by more than a quarter as Hongkongers increasingly look for tranquility and bigger spaces now that convenience and an easy commute are less important, say agents.
The Islands district saw a 28.5 per cent leap in transactions in the secondary housing market last year to 1,699, according to Midland Realty. That was the fourth largest increase among the 18 districts, up from 10th in 2019.
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The district includes Tung Chung, Discovery Bay, Lantau Island, Cheung Chau and Peng Chau.
Under the pandemic, people have placed unprecedented emphasis on health and the environment, said Owen Yau, associate director of realty investment at Savills.
“People’s lifestyles, pastimes, and even their preferences for where they live have all changed due to the pandemic,” Yau said. “There has been a significant increase in inquiries about low-density properties in the New Territories and outlying islands.”
In South Lantau, which is around 30 minutes to Central by ferry, transactions in 2020 jumped by around 30 per cent as “people are re-evaluating what’s important”, said Kelly Merrick, an agent at Homesolutions Real Estate, which specialises in Lantau Island.
“The price per square foot is still quite low. It’s still quite affordable, it’s kind of a secret gem. Not everybody knows about South Lantau.
“You get more green space, more privacy. That is very appealing during lockdown, when you have a backyard or rooftop where you can go outside, have dinner and enjoy yourself.”
Despite a market dampened by the pandemic, the number of transactions across Hong Kong for lived-in homes increased last year as purchasing power shifted to the secondary market and several new project launches were delayed. Sha Tin in the New Territories saw the biggest year-on-year increase, according to Midland’s data.
The average price per square foot of a lived-in home in the Islands and Tung Chung district, at HK$11,595 (US$1,495), was the lowest among the 18 districts and 41 per cent lower than the HK$19,655 average for Hong Kong Island, according to Midland’s data.
There are bargains on outlying islands that are rarely found elsewhere in Hong Kong. For instance, Homesolutions has a listing for a 700 sq ft village house in Pui O with an asking price of just HK$3.5 million, or HK$5,000 per square foot.
A seaside flat measuring 485 sq ft recently changed hands for HK$2.71 million, just HK$5,594 per square foot, at Tin Lee Court in Tai O in western Lantau.
As it is, a 26-year-old flat that is part of the government’s Home Ownership Scheme would be eligible for a mortgage of up to 95 per cent, meaning a first-time buyer might only need a deposit of about HK$135,500, with mortgage insurance from the Hong Kong Mortgage Corporation.
Private homes on outlying islands can “in principle” get mortgages with a 90 per cent loan-to-value ratio if they are worth less than HK$8 million, said Ivy Wong, managing director at Centaline Mortgage Broker.
But she said banks may not offer mortgages for properties on the smaller, lesser-known islands or ones that are very inconvenient in terms of transport. Some banks are also unlikely to approve mortgages for properties more than 35 years old on an outlying island.
At Butterfly Crest, a development on southern Lantau Island, a house near the beach measuring 1,930 sq ft went for HK$20.8 million, or HK$10,777 per square foot, in December. A flat of the same size at Royal Ascot in Fo Tan is currently asking HK$32.8 million, or HK$16,995 per square foot, according to Midland.
Greenery, a peaceful environment and proximity to the great outdoors have become more important to people than being close to essential infrastructure like the Mid-Levels escalator or an MTR station, according to Naomi Budden, founder and managing director of real estate agency Nest Property.
“We have seen a clear lateral shift in housing needs, whereby families are looking for increased space – be that an additional room that they can turn into a home office, or a garden – or are looking to move further out of the city.”
Remote working has been normalised during the pandemic and looks as if it is here to stay.
“With Covid-19 limiting global travel, and forcing most professionals to work from home, Hong Kong residents are opting to [take advantage of] their less frequent commutes to be closer to the beaches and hiking trails,” said Will Robertson, executive director of Nest Property.
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