The luxury market endured a difficult year in 2020, in particular at the top end with border closures hindering both potential buyers and capital inflows.

• Luxury volumes fell heavily in the last three months of 2020 with border closures hindering both potential buyers as well as capital inflows.  
• Together with other potential launches, luxury launches on Hong Kong Island may involve over 800 units in 2021, a recent annual high.
• Mass volumes staged a rebound in Q4, in particular in the second-hand market, with low interest rates, resilient demand, a raft of favourable policies and a lagging launch schedule all helping to fuel sentiment. 
• As many as 31,000 units may be launched for pre-sale in 2021 according to our in-house estimates, although the volatile virus situation may yet push back some launch schedules.  With an average primary take-up rate of 17,500 units per annum over the past five years the high number of new launches could test the market. 
• Any revival at the top end of the residential market will depend on the timing and extent of border reopening, in particular with Mainland China.  With timings still very uncertain, and the first batch of re-entering investors likely to be bargain hunters looking for discounted assets, coupled with an escalating number of new luxury launches, we expect luxury prices to decline by another 5% to 10% in 2021.
• Abundant liquidity and low real interest rates are two persistent factors supporting the mass residential market. While unemployment and bankruptcy may rise over the next few months after the ending of government subsidies, the gradual containment of COVID-19 may lead to economic recovery in the second half of 2021, with the property market likely to respond earlier.