SINGAPORE (EDGEPROP) - Hong Kong is unlikely to see a significant impact on housing demand from the growing emigration wave, according to the president of the Real Estate Developers Association of Hong Kong (Reda), joining a chorus of market observers who expect prices to continue rising this year. (See also: Hong Kong starts Reit subsidy plan to make up for lost decade as rival markets flourish from Singapore to Japan)

"I know some people are leaving, but some people are moving here to Hong Kong," said Keith Kerr, president of Reda and a former chairman and chief executive at Swire Properties. "For every person moving out, there's probably at least the same number, if not more people coming in, so I don't think that really is going to affect demand in the medium to longer term."

There would be "a positive uptrend for the rest of the year, barring any unforeseen circumstances" as the market is relatively strong at the moment, said Kerr, who set up his boutique property firm known as The Development Studio (TDS) after he retired from Swire in 2009.

"The economy is picking up, stock market is active, and I think the demand for residential accommodation will remain strong," he added.

Since the introduction of the national security law in June last year, many Hongkongers have been looking to move overseas to escape what they perceive to be the erosion of certain freedoms by an increasingly bold and assertive Beijing. The number of applications for certificates required for visas, and withdrawals of Mandatory Provident Fund savings on the grounds of permanent departure from Hong Kong has risen in recent months.

But the exodus will probably not translate into a slowdown in the housing market, analysts said.

In fact, sentiment in Hong Kong's property market has improved over the past few months amid a brightening economic outlook, falling unemployment rate as the coronavirus pandemic in the city has largely been brought under control.

An index measuring secondary home prices rose 0.6 per cent in May to a 23-month high of 393.7, a mere 0.8 per cent from its May 2019 historical peak, according to data released by the Rating and Valuation Department this week.

US investments banks Goldman Sachs and Morgan Stanley are bullish on the city's property prices. Goldman said in a June 4 report that it expected a 5 per cent rise this year given the low interest rates and an improving economy. Morgan Stanley was slightly more restrained in its report released in April, forecasting a 3 per cent rise this year.

With residential property prices having already risen 3.1 per cent so far this year, according to data from the Rating and Valuation Department, property consultants expect prices to rise further.

"If we can control the Covid-19 situation, the full-year increase will be between 5 and 10 per cent," said Joseph Tsang, chairman of JLL in Hong Kong.

Centaline Group and Ricacorp Properties, two of the city's biggest property agencies, also expect home prices to rise to new highs as the current levels are marginally below the peak in 2019.

Separately, Kerr's TDS on Monday announced the pricing of its 42 Tung St. residential project, near Central. The 23-storey building, comprising only 13 apartments - nine simplex and four duplex units, will be ready in September next year.

The company said it would sell eight simplex units of 585 sq ft each at prices ranging from HK$19.24 million (US$2.48 million) to HK$22.75 million, or HK$32,889 to HK$38,889 per square foot after discounts.

TDS plans to sell the four duplex units measuring 1,157 sq ft and a 346 sq ft simplex unit by tender from August 1.

JLL's Tsang said that Swire Properties sold homes in its nearby Eight Star Street project at about $40,000 psf, with some fetching as much as HK$50,000 psf.

Kerr's first residential development project with TDS was 28 Aberdeen St. in Sheung Wan in 2017. He said that project gave the firm the experience to deal with the complexities of undertaking a project like 42 Tung St. on a small site. Its difficulty was "not in the building process", but regulatory issues and securing approvals for matters such as traffic flow.

"Real estate development in Hong Kong is a complicated business, especially in the urban areas, so it did take time to get a few issues resolved," Kerr said. "But now we're [already building] the 15th floor, so we're well under construction for completion next year."

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.