Hong Kong China Real Estate
China's national security law, which has come under criticism for its draconian crackdown on dissent in Hong Kong, has forced US investors and investors to reconsider their investment options in the city's real estate market, and has supported the sale of certain new luxury properties. The Chinese government's crackdown on foreign investment in real estate and real estate development has a welcome effect on developers across the Pearl River Delta. Data from Zillow, an online property listing service based in Hong Kong, shows that listings and advertising requests from foreign developers have risen 62 percent this year.
Chinese investment accounted for nearly half of all foreign investment in Hong Kong's property market, up from 19% in all of 2019, Colliers said. Chinese investment in the first quarter of this year was $1.2 billion, up 12% from the same period a year ago, and Collier's said it accounted for more than a third of the city's total investment of $2.5 billion.
Chinese Hong Kongers, who own 218,975 properties in London, are more than twice as many as the 98,725 Hong Kongers, according to the latest data from the London property authority. The Chinese - the city-linked home buyers - are now outpacing mainland Chinese buyers, "said David Lee, chief economist at Colliers International, a real estate research firm, who has observed the same phenomenon in his own research.
In the residential property market, the continued decline in property prices shows that there may be a lack of demand for Hong Kong citizens to buy their own home, he said. But to regain value, Hong Kong has welcomed more Chinese investors from the mainland to buy commercial property in the city. Yan said capital controls imposed by Beijing on money flowing out of China had also hurt Hong Kong real estate.
For mainlanders, buying property in Hong Kong is a way to reduce the cost of living and the risk of eviction, he said. But not many Hong Kong Chinese who do not own homes, as he understood it, appreciate the fact that they are considered all - somehow - living apartment dwellers and squatters, according to Edward Leung, a professor at the Chinese Academy of Social Sciences. It is not uncommon for mainland buyers to buy multiple HK $10 million ($1.5 million) or more apartments in a single property and pay in cash, and they may not settle for just one. However, he said that if the Chinese people cannot invest further from the mainland, they will decide to invest in HK $1 million to $2 million per year, or even more if they cannot continue to invest.
Mainland Chinese, who make up an estimated 25 to 40% of Hong Kong's total real estate market, will maintain their investments even if overall property prices fall by 10 to 30%, analysts said.
For now, the fall in home prices has kept Hong Kong's mood afloat, but the Hong Kong East will continue to benefit from residents "moves.
Investors are also cautious about being too optimistic about the long-term prospects of Hong Kong's real estate market, given the high cost of living and the lack of investment opportunities in the city's east.
The trade dispute between China and the US is escalating and is likely to have a negative impact on Hong Kong's real estate market in the short term. Chinese capital, which has helped make it one of the most attractive investment destinations for Chinese investors in mainland China, expects real estate agents to support the sector while China is prepared to provide liquidity. If China is unable or unwilling to use its liquidity, it may need an inflow of Chinese capital to strengthen its position as a global hub for investment and economic growth. Real estate brokers expect it to shore up the sector, with China ready to provide liquidity as it pursues a long-term investment strategy.
Check out our other articles on the protests in Hong Kong, and then read about the conditions Hong Kong's poor once had to live in. Check out our analysis of the cost of real estate transactions compared to the rest of Asia for a detailed look at the real estate market in Hong Kong and China.
With more and more people moving to Hong Kong, foreign property developers are struggling to target wealthy investors in the region. As appetite for foreign investment in China wanes, many mainland investors are trying to sell their homes they have already bought. But, because it is home to active investors with a high dollar, Hong Kong is still a significant and attractive real estate market.
The influx of rich from mainland China has pushed up property prices to the point where Hong Kong now has the highest level of income inequality in Asia. According to a recent report by the Hong Kong and Macau Development Authority (HKDA), Chinese buyers, most of whom come from mainland China, have stopped buying in the last two years.