Rediscovery: DB Housing Market Update!

The road to real estate market recovery could have an offramp through Discovery Bay. Elizabeth Kerr reports Hong Kong’s real estate markets are nothing if not volatile. In one of the world’s most dynamic markets, minor external factors can have an outsized impact in the SAR, and events that bring major centres such as London or Tokyo to a screeching halt can barely cause a ripple. Perhaps unsurprisingly, 2024 proved to be another unpredictable year, and the November election of Donald Trump to another presidency – and the ensuing chaos his administration has wrought – has caused investors to proceed with caution, if at all, and sent global monetary policy into damage control. So what does this mean for Discovery Bay? Hong Kong’s residential market overall started showing signs of post-pandemic recovery late in 2024. Then the 2025/26 budget increased the threshold for homes subject to the HK$100 stamp duty to HK$4 million – a boon for firsttime purchasers and a complement to last year’s elimination of cooling measures in place since 2012 – and increased the LTV ratio. With fur ther interest rate cuts anticipated, the forecast was for continued recovery and transactions rose, par ticularly in the primary market, where luxury residential flat rents crept up 0.8% and investment spiked 70% according to JLL. But data takes time to compile and by Q2/2025 global trade policy and relations caught fire, making a lot of people hit pause on major purchases – including in Hong Kong. “The ongoing trade war r isks stif ling economic growth and stock market decline, pressur ing residential proper ty values. We expect mass and luxur y residential capital values to drop by about 5% in 2025,” concluded JLL in its May APPD Market repor t. “However, luxur y rent s are projected to continue rising, dr iven by an inf lux of mainland Chinese families and some return of expatriates, par ticular ly those in the finance and investment sectors.” In DB prices are still as much as 20% below their peaks in 2021 as of Q2, with some proper ties transacting below bank valuation. Rents have stabilised but remain lower than comparable districts after tumbling nearly 40% between 2019 and 2024. “This makes DB relatively af fordable, especially for larger family units,” says Sdever Li, director of residential services at Savills Hong Kong. According to Savills, flats on The Peak and in Mid-Levels leased for well over HK$100,000 late in 2024, over HK$75,000 in Kowloon (Austin) and HK$54,000 in Sai Kung. By comparison, two houses in DB rented for HK$40,000 and HK$48,000. “DB is cur rently seen as a value buy in the Hong Kong market, especially for those seeking space, greener y and a community vibe,” Li adds. Christine King, director of DB-based Headland Homes, however, argues that recent price cor rections prompted many to take the oppor tunity to buy what was once unaf fordable and that window could be closing. “Recently there has been an inf lux of tenants and buyers, especially at the luxury end of the rental market. I can’t say if Hong Kong is doing better than us… but we’re popular with families and people who prefer community living.” DB certainly wasn’t immune to the turmoil of the past few years. It was subjected to cooling measures like all other districts, hot investment money and, of course, COVID-19. “DB was significantly af fected by the emigration wave during 2022-23,” states Li. “As many expatriates and local families lef t Hong Kong, DB – traditionally popular with expats due to it s resor tlike lifestyle and international school access – saw a sharp drop in demand. This led to falling prices and rising vacancies.” That said, Li notes signs of recover y thanks to expats returning from the UK and Singapore in par ticular, and increasing numbers of mainland buyers equally keen on DB’s schools and family-friendliness. Favourable policy shif ts like those reduced stamp duties, interest rate cuts and more feasible mor tgage rules have also improved buyer sentiment. “However, DB’s recover y is still sensitive to broader economic sentiment and buyer confidence,” cautions Li. DB isn’t officially listed among Hong Kong’s luxury districts, but in a market where the fundamental concept of ‘luxury’ has been redefined in recent years to include factors such as a neighbourhood feel, natural environments and wellbeing, it slots in nicely with emerging district s such as Sai Kung, Shek O and Stanley. As Li points out, prices and rents are still below peak, making DB a relative bargain and possibly an investment destination. “DB has always been positioned more as a lifestyle enclave than a traditional luxury district like The Peak or Repulse Bay,” notes Li, appealing for its beaches, greenery, international schools and low-traf fic streets. “As an investment, DB is less speculative and more yield-focused, especially in the rental market. Capital appreciation has been modest, but rental yields are improving as prices remain soft and demand returns.” King agrees, refer ring to DB as a mixed bag that has always had its share of luxur y – such as af fordable garden homes, a rarit y in Hong Kong – and always will. “There seems to be a larger amount of owner-occupiers now,” she says, adding, “Considering the location, the airpor t brings many airpor t staf f to live in DB, the Macau bridge is convenient for commuters to that region and an easy commute to Shenzhen, I think the investment potential is still there.” The rest of 2025 is poised to be a challenging one for many industries, from retail to tourism. In real estate, challenges include oversupply in some sectors and economic uncer tainty, and as Li sees it DB has unique hurdles that could negatively impact its market, among them: limited transpor t connectivity and reliance on volatile expatriate demand. Finishes Li, “That said, if Hong Kong’s broader recovery continues, DB could benefit from spillover demand from buyers priced out of more central areas.” LOCAL REALTORS -Centaline Property Agency, 2987 8484 -Century 21 Newcourt Realty, 2987 9729 -Headland Homes, 2987 2088 -Kingsland, 2987 2987 -Land Master Property, 2987 6238 -Midland Realty, 2987 2888 -Okay.com, 2102 0888 -Pacific Estate, 2987 2928