HK Real Estate Trend: COVID-19 May Be Influencing Consumers to Move Away from Central Areas

After a difficult 2019, the novel coronavirus has hit Hong Kong's economy hard. Which districts have seen their real estate hit the hardest, and are any beginning to show signs of recovery?
Real Estate Data Suggest COVID-19 Is Influencing Hong Kongers to Move Away From Central Areas

Hong Kong is known for having some of the most expensive real estate in the world. However, Hong Kong's real estate market has declined by 29% since its peak in Oct 2019, largely influenced by the COVID-19 outbreak. On a closer look, it seems like not every district was impacted the same way during this downturn. In this study, we explore how real estate prices and sales volumes have changed over the course of the past few months of turbulence to examine COVID-19's impact on HK's real estate market.

Study Highlights

  • For the first time since 2000, total value of real estate transactions in outer New Territories are outpacing real estate transactions in central areas of HK
  • It seems that consumers are moving out of "Central" areas into the New Territories, as prices in HK Island & Kowloon are seeing the biggest drop in real estate prices
  • Meanwhile, districts in the New Territories like Tai Po, Sai Kung, Shatin, Tsuen Wan, Yuen Long and the Islands District have seen a rapid uptick in sales volumes, as well as less dramatic decreases, or even increases, in price
  • Recently increasing sales volumes may indicate an increase in demand, especially for units in outer areas
  • We also found similar shifts in demand from dense downtowns to more open outer areas in other global financial centres like New York City and Singapore

Hong Kong and Kowloon Real Estate Hit the Hardest

COVID-19's outbreak may be causing a major shift in the way buyers are thinking about real estate in Hong Kong. In fact, for the first time since 2000, total real estate transactions in the "Outer" districts have been higher than the total occurring in the "Central" areas thus far in 2020. This finding suggests that consumers are moving out of densely populated "Central" areas in favour of districts in the New Territories.

Table showing quarterly consideration for Central and Outer Districts

In fact, our analysis of real estate transactions in HK showed that "Central" areas including HK Island and Kowloon are receiving the biggest shock from COVID-19. Compared to the market's peak in October 2019, consideration per unit—the average amount paid per transaction—fell by -58.77% in Hong Kong Island and -37.91% in Kowloon, compared to an 18.97% increase in "Outer" districts.

Average Price and Total Consideration of Real Estate Transactions in HK

HK IslandKowloonOuter Districts
October 2019 Avg. PriceHK$35.23/UnitHK$13.25/UnitHK$6.88/Unit
July 2020 Avg. PriceHK$14.52/UnitHK$8.22/UnitHK$8.19/Unit
% Change-58.77%-37.91%18.97%
October 2019 Consideration (mn)HK$23,181HK$24,995HK$17,417
July 2020 Consideration (mn)HK$16,485HK$13,809HK$39,000
% Change-28.89%-44.75%123.92%
Average Prices and Considerations are Expressed as HK$1,000,000

Rise in Demand for Real Estate in Outer Areas During the Pandemic

Living further away from the city centre may mean a longer commute to offices and less options for dining out and entertainment. However, with COVID-19 restrictions closing dine-in restaurants and prohibiting indoor or outdoor gatherings of over 2 people, these drawbacks are much less noticeable than before. In fact, our research indicates that people might actually be moving away from or at least showing less interest in densely populated areas, in favour of moving into "Outer" districts.

Since the market's peak in 2019, none of the "Outer" districts in the New Territories saw average prices decrease by the same amount as Kowloon or Hong Kong did. In fact, select areas like Sai Kung, Shatin, Tuen Mun and Yuen Long have all seen their prices increase dramatically since the market's peak in October 2019.

Percent Change in Avg Real Estate Transaction Price in HK Since Peak (July 2020 vs Oct. 2019)

DistrictPrice % Change
Hong Kong Island-58.77%
Tsuen Wan-21.35%
Islands District-9.19%
Tai Po-4.81%
Sai Kung19.91%
Yuen Long33.58%
Tuen Mun54.16%

Interestingly, while real estate sales volumes in Hong Kong have been rebounding since January 2020, "Outer" regions have seen a steeper rate of sales growth compared to "Central" ones. This faster rate in sales growth in "Outer" districts, combined with more stable or increasing prices may indicate an increase in demand for units in less densely populated areas.

Percentage Change in Total Real Estate Transaction Volume in HK

AreaJuly 2020 vs October 2019July 2020 vs January 2020
Outer Districts88.22%124.20%
Central Districts10.57%70.34%
Central Districts defined as Hong Kong Island and Kowloon. Outer Districts defined as Islands District, North, Sai Kung, Shatin, Tai Po, Tsuen Wan, Tuen Mun & Yuen Long

Similar Patterns in Other Major Financial Centres

Our team wanted to examine other global financial centres like New York City and Singapore to see if they were experiencing a similar shift in demand from downtown city centres to outer areas. New York City, like Hong Kong, is showing notable signs of property owners turning their attention away from the densely populated business centre of Manhattan in favour of the less dense outer boroughs and suburbs. According to market reports published by Douglas Elliman Real Estate (a major broker in New York), prices and sales on the island of Manhattan has been hit the hardest compared to the second quarter of 2019. While sales decreased across the board, sales volume decreases were less dramatic in less populated boroughs like Brooklyn and Queens. In particular, Westchester County (a less densely populated suburb directly north of New York City) saw real estate prices increase more than any burrough in the city and saw the smallest decrease in sales volume and total consideration. As in Hong Kong, potential purchasers seem to be looking more towards the more outlying areas of New York.

Percent Change in Real Estate Price & Volume in New York

Area2020 Q2 % Price Change (Y/Y)2020 Q2 % Volume Change (Y/Y)2020 Total Consideration % Change (Y/Y)People/Sq Km

Real estate prices in Singapore are also showing a similar change in prices to those in Hong Kong as the city-state has dealt with the pandemic. Between Q1 and Q2 2020, the average price per square foot of apartments and condominiums fell by -3.83% in Singapore's downtown areas, while it actually rose by 4.07% in the outer towns. This trend has continued into July, where prices have fallen by another -7.15% from Q1 tcompared to a 4.94% increase in the outer areas. Ultimately, Singaporeans may also be showing more interest in flats in outer towns than those in the more crowded downtown.

Table showing average price per square foot in downtown and outer areas of Singapore

A Rebound in H2 of 2020?

When examining trends in Hong Kong, we noticed that there has actually been a rebound in sales volumes, average price and total consideration in June. This held true for both the "Central" and "Outer" areas of Hong Kong.

Percent Change in Total Real Estate Transaction Value & Volume in HK (June vs January 2020)

HK CentralHK Outer
% Volume Change (June vs Jan. 2020)99.58%133.38%
% Consideration Change (June vs Jan. 2020)137.28%147.38%
Central Districts defined as Hong Kong Island and Kowloon. Outer Districts defined as Islands District, North, Sai Kung, Shatin, Tai Po, Tsuen Wan, Tuen Mun & Yuen Long

However, in July we are now seeing a decline in the volume and total considerations of "Central" areas, with a less steep volume drop and a rise in the total consideration of "Outer" areas. As Hong Kong entered the 3rd wave of the pandemic in July, purchasers again seem to be fleeing from "Central" areas to less densely populated ones. Given this trend, the shift away from central locations in HK may continue as long as COVID-19 remains prevalent.

Percent Change in Total Real Estate Transaction Value & Volume in HK (July vs June 2020)

HK CentralHK Outer
% Volume Change (July vs June) 2020)-14.65%-3.93%
% Consideration Change (July vs June 2020)-17.35%16.00%
Central Districts defined as Hong Kong Island and Kowloon. Outer Districts defined as Islands District, North, Sai Kung, Shatin, Tai Po, Tsuen Wan, Tuen Mun & Yuen Long


In conducting this research, we primarily drew information from government statistics and published market reports. Key sources include:

  • HK Land Registry, Property Market Statistics
  • SG Urban Redevelopment Authority, Apartment and Condominium Sales
  • Douglas Elliman Market Reports
  • Hong Kong Census and Statistics Department, Population Statistical Report
  • Singapore Department of Statistics, Basic Demographic Characteristics
  • United States Census Bureau

To first understand changes in the Hong Kong real estate market, we located monthly data points like total sales volume and consideration since the beginning of 2019. Next we compared these statistics on a monthly, quarterly and half-year basis, and examined how they have changed since the beginning of the pandemic. The credibility of this data is quite high since it was gathered from government sources in Hong Kong.

After we understood general trends, the next step was to narrow down our analysis to the less and more populated areas of Hong Kong. Instead of the usual 18 political districts, The Land Registry groups Hong Kong into 10 distinct areas. We then categorised these areas by relative population density into "Central" (Hong Kong Island and Kowloon) and "Outer" districts (Islands District, North, Sai Kung, Shatin, Tai Po, Tsuen Wan, Tuen Mun and Yuen Long). To see how the changes in Hong Kong real estate prices compares to other global financial centres, we performed similar analyses on the real estate sales and pricing data in Singapore and New York City.

Jacob Weiss

Jacob is a Junior Research Analyst at ValueChampion, focusing on credit cards and other consumer financial products. Previously, he covered hedge funds and long only products for Cambridge Associates. He holds a B.S. in Finance from the University of Maryland and has passed Level 1 of the CFA exam.

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