RISING MAINLAND APPETITE FOR HONG KONG HOMES.

 

the red hot properties of Hong Kong.

 

Channel News Asia reports:

Hong Kong has seen a surge in mainland Chinese buying luxury homes in the territory, according to a survey published as the authorities move to limit inward property investment.

Mainland investors have long been lured by the prospect of residency in the former British colony, a financial centre and gateway to China that is run under a different legal system and boasts higher living standards.

Influxes of mainland investment have contributed to a 20 percent rise in residential property prices in the last year, city chief Donald Tsang acknowledged on Wednesday as he announced measures aimed at cooling the market and alleviating public concern.

In a new report, real estate agency Centaline estimated that for the first half of this year 35.1 percent of new home sales worth over 12 million Hong Kong dollars (1.5 million US) had been to mainland buyers, up from 22.5 percent in the second half of 2009.

The agency, which publishes regular property market surveys, acknowledged that mainland investment might now be constrained by a move announced by Tsang that will suspend granting residency to outsiders who invest in property.

“Some mainland buyers will inevitably be put off by the changes to the scheme announced yesterday. After all, buying property is a key way to gaining residency here,” said Centaline’s managing director for residential sales, Louis Chan.

He predicted a five percent drop in the number of mainlanders purchasing high-end property.

However any expectations of a more dramatic drop in mainland Chinese coming to invest in Hong Kong’s property market might be misplaced.

Wong Leung-sing, a fellow researcher at Centaline, noted there had been no move to limit the issuing of residency rights for those making other kinds of large investment.

“Mainland investors still have a lot of ways of gaining residency in Hong Kong,” said Wong. “They can invest in the stock market for example…. I foresee the luxury property market remaining strong.”

Property prices in Hong Kong have surged nearly 45 percent from their trough at the end of 2008, while prices of some luxury flats have returned to, or surpassed, the peaks of the 1997 boom.

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