Hong Kong Overtakes London As World's Top Luxury Home Market07:16
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Victoria Harbor and the skyline on Hong Kong island in 2016. (Anthony Wallace/AFP/Getty Images)MoreCloseclosemore
Victoria Harbor and the skyline on Hong Kong island in 2016. (Anthony Wallace/AFP/Getty Images)

For the first time, Hong Kong has surpassed London as the world's No. 1 market for luxury homes, according to a report by Christie's International Real Estate. A record number of homes sold for $100 million or more in Hong Kong in 2016.

Here & Now's Jeremy Hobson talks with Dan Conn, CEO of Christie's International Real Estate, about the global market for luxury homes and who's buying them.

Interview Highlights

On why Hong Kong's real estate market is on the rise

"I think there are a couple of factors animating the real estate market there, the first is that there's a significant amount of built-up Chinese wealth that is looking for a relatively safe place to deploy capital. And if you think about Hong Kong, one, it's a logical market for them to invest, and two, if they're thinking in terms of a hedge for the domestic currency, it's a good place to do it — relatively safe, relatively close and easy to understand. So it has become a very attractive place for the Chinese to deploy capital."

On whether Chinese buyers are buying in Hong Kong in order to live there

"Some are, in fact in 2017, now the record home price ever in Hong Kong, and publicly reported it's the highest price in the world, is a $360 million teardown, a buyer from China who bought a property on the peak in Hong Kong is tearing it down, and building a single-family home that he will be living in with his family. It'll be about a 25,000-square-foot home. So it's not all investment.

"I say 'deploy capital' because, I think once you start talking about the ultra-high net worth individuals who are buying these types of property, they are thinking about portfolio diversification, they're thinking about asset accumulation. In this case, they're also investing in what will be a significant primary home for them."

On what a $100 million home looks like

"When you're talking about that kind of money, in reality, somebody could afford to build the Batcave. You wouldn't necessarily know about it, but they could have it. There's a good example, there are a couple good examples in LA, one which I would call an 'entry-level $100 million price point,' if you will, where you're getting a stunning home, beautiful views, high security, private, but they are now increasingly being amenitized. There is one that is coming with Damien Hirst and Warhol art, as well as, if it's your taste, a gold Rolls-Royce and a gold Lamborghini. There's another home, a quarter of a billion dollars, it's coming with a full art collection, a wine collection and a car collection, which has apparently been appraised at about $30 million."

"When you're talking about that kind of money, in reality, somebody could afford to build the Batcave. You wouldn't necessarily know about it, but they could have it."

Dan Conn, on what a $100 million home looks like

On who the buyers are

"It's a combination. In New York, you tend to hear more about finance people buying at this end of the market. In Hong Kong, a lot of the wealth — at least historically — was generated from real estate, and now obviously in past decades, you've seen it increasingly from manufacturing, technology, and so I would say it's a bit mixed there. Some of the other big buyers of luxury homes come from technology backgrounds, so I wouldn't say there's one category."

On why cities like London have fallen in the rankings

"It's an interesting comparison. The U.K. has been, I would say, disproportionately impacted by a combination of uncertainty, political uncertainty, geopolitical uncertainty, economic uncertainty. They were hit with significant stamp duties after the election of David Cameron, and then that rolled into Brexit, which they're still living through, and they have the imminent new election. And so, they were down, London was down, prime central London was down 35 percent this past year in sales volume.

"Hong Kong, on the other hand, their cooling measures went in some time ago. The market has adjusted to it. But there is no doubt that the concentration of Chinese wealth is impacting Hong Kong now more than ever, and that's why you saw four $100 million homes in 2016, you've already seen two this year."

On whether markets in U.S. cities outside New York and LA are benefiting from the luxury market boom

"A significant number of cities are benefiting. LA has seen a significant uptick as we've noted. San Francisco has been on fire for the last several years, this year was no exception. There are other, what I might call 'second-tier' cities, not the biggest ones you think of, but places like Austin, that have also been pretty hot this year. It's just fueled by a variety of factors: If you're on the West Coast, there's a bit of a Pan-Pacific influence. There's Asian money involved, there's also tech money involved, and then there's the third piece of it, which is important, which is lifestyle, which encompasses physical environment, education, all of the reasons that you can think of that you would wanna live on the West Coast.

"In most markets, the luxury end has been healthy, with only a couple of notable exceptions. Miami, which you could look at, there's been a significant lift in inventory there. There are a lot of developers who moved into that market, and as they were getting nearer to completion, one of their core buyer markets, which was Latin America, started to really suffer. So Miami, I would say foremost among the cities that have struggled with all of the new inventory."

This segment aired on May 24, 2017.

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