Hong Kong's Peak rises above London, New York

Hong Kong's luxury real estate market is hotter than even New York's and London's.

Prices on the Peak, the top of Hong Kong island, are rising as China's economic growth spawns a generation of buyers looking to rub shoulders with Western executives and the city's richest families. Prices at the Peak start at HK$15 million ($2.7 million) for a two-bedroom, 1200sq ft (111sq m) apartment and exceed HK$200 million for houses.

"The Peak used to be occupied by the old money of Hong Kong," said Eddie Tam, 43, a watch-seller's son who spent more than US$1 million to renovate his 3581sq ft home and fill it with chandeliers, antiques and works by artists such as Zhang Daqian, painter of the world's most expensive Chinese picture. "I definitely belong to a new generation of owners."

Realtor Knight Frank said film star Stephen Chow drew bids of up to HK$120 million, or a record HK$32,400 ($5900) a sq ft, last month for his four-storey Peak home.

London's priciest homes sell for the equivalent of as much as 2000 ($5200) a sq ft, the company said. A New York apartment facing the Hudson River goes for upwards of US$2500 ($3600) a sq ft, says Nicholas Brooke of Professional Property Services, a Hong Kong-based real estate adviser.

Demand this year surged for landed property on the Peak worth HK$40 million or more, said Raymond Fung, a director at Knight Frank Hong Kong.

"Single-house property is so popular because people with money want to live by themselves, preferably with no neighbours, and certainly not with the average folks."

Hong Kong's property prices have risen for more than a year as the economy expanded and the jobless rate fell to a four-year low, rebounding from a slump in 2003 caused by recession and the Sars virus epidemic in the city.

"Property at the Peak has lifted off big time," said K. S. Koh, managing director of Landscope Realty. "Hong Kong's economic revival has restored demand for luxury living, and the Peak is where Hong Kong's rich and famous want to be."

The Peak, which rises 554 metres above Hong Kong's harbour, is often shrouded in fog in winter. In summer, its wooded slopes offer cooler temperatures than the densely packed harbour-side suburbs, part of the reason it was chosen as the site of the summer residence for British governors in colonial times.

Average prices at the Peak doubled to HK$12,600 a sq ft in August from HK$6500 in mid-2003, said Ben Ma, research manager at Knight Frank. Mass-market prices have risen more than 60 per cent to about HK$4500 over the same period.

Fung said prices in luxury neighbourhoods were rising faster than those in the mass market because rising interest rates were deterring some middle-class buyers.

HSBC Holdings, the city's largest lender, increased its prime lending rate 25 basis points to 6.75 per cent on August 11. The rate was 5 per cent at the beginning of 2005.

"Mortgage rates aren't a huge problem for those at the Peak," said Fung. "Many of them pay cash."

The record in Hong Kong property prices is held by an apartment in the Arch in Kowloon, which sold in April for HK$31,500 a sq ft, says Sun Hung Kai Properties.

- BLOOMBERG