Its slightly more temperate climate, exclusive geography and panoramic views have long made The Peak the most sought-after residential enclave in Hong Kong.

"... development opportunities in these areas are extremely rare, and prime properties are increasingly hard to come by."

1 - Hong Kong's ranking in the Index of Economic Freedom
7,650 - The number of skyscrapers in Hong Kong
42 million - The number of overseas tourists in 2011

The opening of the Peak Tram in 1888 probably did most to popularise The Peak which, up to then, had been used as an exclusive summer retreat. Today, the district has only 70 standalone houses, as well as a limited supply of high-end townhouses and apartments. Some of the cityscapes visible from The Peak are among the most spectacular in the world.

The Southside is not one residential enclave but several, including Deepwater Bay, Repulse Bay and Shek O. Each has its own character and amenities, from the nine-hole golf course in Deepwater Bay, to the American Club in Repulse Bay, and the Golf and Country Club in Shek O. All have direct access to spectacular beaches with views over the South China Sea. Supply is limited and on Shek O Road, for example, total stock comprises only 22 stand-alone houses. In Deepwater Bay and Repulse Bay, the stock of single-lot properties and townhouses totals 116 and 269 respectively.

In common with many of the luxury enclaves listed in this publication, development opportunities in these areas are extremely rare, and prime properties are increasingly hard to come by. This scarcity of prime real estate is unlikely to change anytime soon - based on Savills estimates there will be only 53 and 60 houses (townhouses and single lots) completed in The Peak and Southside districts respectively between 2011 and 2015. According to the government, there are only 2,435 houses (townhouses and single lots) on Hong Kong Island, 1,659 of which are located on the Southside.

Ongoing integration with mainland China is now the most important driver of the luxury residential market, and will be for some time, as buyers from the mainland rose from nearly 5% of the high-end property segment in 2004 to over 20% by 2010. Chinese billionaires have already extended their footprint in prime areas in recent years with Ma Huateng, Chairman of Tencent being the first mainland billionaire to move to Shek O Road in 2010. PRC high net worth individuals find Hong Kong particularly alluring because of its rule of law, its wide diversity of investment avenues, and the freedoms and lifestyle it offers.

There are no restrictions on overseas ownership in Hong Kong and there is no capital gains tax either. However, gains which are part of normal trading activities (if an individual is selling a property 'as part of a scheme of profit making') are taxable at 16.5% for incorporated entities and 15% for unincorporated entities. Be aware also that any residential property acquired on or after 20 November 2010 and resold within 24 months is subject to a special stamp duty.

47 Barker Road, The Peak, Hong Kong
Gross Floor Area: 3,883 sq ft Site Area: 7,766 sq ft
Transaction Price: HK$203.8 million (HK$52,485 per sq ft)
Transacted Date: January 2011

20-22 South Bay Road, Repulse Bay, Hong Kong
Gross Floor Area: 37,324 sq ft Site Area: 20,723 sq ft
Transaction Price: HK$880 million (HK$23,577 per sq ft)
Transacted Date: January 2011

Source from Savills