Main­land buy­ers of HK homes help drive prices

China Daily (USA) - - BUSINESS - By BLOOMBERG

A surge in pur­chases of Hong Kong homes by non­res­i­dents of­fers one ex­pla­na­tion for what’s driven an 11 per­cent re­bound in prop­erty prices from aMarch bot­tom.

In Septem­ber, 250 homes were sold to non-res­i­dents, the most in 14 months and 36 per­cent higher than the av­er­age for the pre­vi­ous four months, ac­cord­ing to data from Hong Kong’s In­land Rev­enue Depart­ment. That com­pared with a low of 62 homes go­ing to out­side buy­ers in Fe­bru­ary, just be­fore the nadir of Hong Kong’s prop­erty mar­ket. While the rev­enuede­part­ment­does not give a break­down on na­tion­al­ity, an­a­lysts and de­vel­op­ers say Chi­nese main­lan­ders are the big­gest buy­ers.

“From the non-lo­cal pool, Chi­nese main­land buy­ers cer­tainly played a star­ring role,” said Ryan Lam, Hong Kong-based head of re­search at Shang­hai Com­mer­cial Bank Ltd.

And they were more ea­ger to step into the Hong Kong prop­erty mar­ket lately, he added, given the prospects for a fur­ther de­pre­ci­a­tion in the yuan.

Chi­nese main­land in­vestors are flock­ing to prop­erty overseas as over­heated mar­kets in cities such as Shang­hai and Shen­zhen are spurring reg­u­la­tors toim­pose curbs to rein in prices. Buy­ers are also at­tracted to Hong Kong’s pegged ex­change rate to the dol­lar as a hedge against a weak­en­ing yuan.

“The ren­minbi’s con­tin­ued de­pre­ci­a­tion and main­land prop­erty con­trols are mak­ing main­land buy­ers ea­ger to come to Hong Kong,” said Sammy Po, head of the res­i­den­tial depart­ment at Mid­land Realty In­ter­na­tional Ltd at a brief­ing

the share of main­land buy­ers who bought homes worth at least HK$20 mil­lion

on Oct 17. “Be­sides, Hong Kong de­vel­op­ers pro­vide tax sub­si­dies to at­tract main­land buy­ers to step into the Hong Kong mar­ket,” he said, re­fer­ring to in­cen­tives of­fered by de­vel­op­ers to help out­side buy­ers off­set added stamp du­ties.

Po said that main­land buy­ers ac­counted for 31 per­cent of prop­erty pur­chases of homes worth at least HK$20 mil­lion ($2.58 mil­lion) in the sec­ond quar­ter. Ac­cord­ing to data from Cen­taline Prop­erty Agency, Chi­nese main­land buy­ers ac­counted for 16.3 per­cent of all pur­chases by value in the sec­ond quar­ter, the most since the fourth quar­ter of 2012, be­fore a 15 per­cent sur­charge on out­side buy­ers was im­posed.

To be sure, non-res­i­dent buy­ers are still a small part of Hong Kong’s over­all res­i­den­tial mar­ket, where trans­ac­tions jumped to a 15month high in Septem­ber with 7,826 trans­ac­tions. Of those, 3,474 were new prop­er­ties of­fered by de­vel­op­ers in­clud­ing Sun Hung Kai Prop­er­ties Ltd and Hen­der­son Land De­vel­op­ment Co. China Overseas Land & In­vest­ment Ltd sold all 300 apart­ments at a project re­stricted toHongKong res­i­dents near the site of the city’s for­mer air­port.

Ricky Wong, man­ag­ing di­rec­tor at Whee­lock Prop­er­ties (Hong Kong) Ltd said ear­lier this month that main­land buy­ers were un­de­terred by the ex­tra taxes they faced when buy­ing prop­er­ties in HongKong.

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