Central, Hong Kong, is known around the world for having exorbitant real estate prices. Photos: CFP
By Dai Ping in Hong Kong
A 56-year-old businessman from Guangzhou, Guangdong Province surnamed Chen had a hankering for a home in Hong Kong. So in mid-September he took a tour organized by Hong Kong developers for mainland property buyers and found what he was looking for: a HK$17 million ($2.19 million) flat with a full view of Victoria Harbor.
"I plan to emigrate to Hong Kong," said Chen. "The loan rates here have been historically low for the last decade or so, and purchasing property here is advantageous for me due to the strong yuan. So I spent more than HK$10 million ($1.29 million) for an apartment in order to apply for the Capital Investment Entrant Scheme (CIES) and live in Hong Kong later," said Chen.
Chen is typical of the waves of mainland buyers flooding into Hong Kong.
Recently, many mainland residents have invested in Hong Kong's property market because of the low loan rates and a better economic future. Some luxury homes sold out so quickly that the developers were unable to meet the demand.
The most expensive one-bedroom apartment in Hong Kong is "the Masterpiece" – a 816-square-foot apartment with one bedroom, one living room and one rest room that sold for HK$24.5 million ($3.15 million), more than HK$30,000 ($3,870) per square foot.
Catering to mainland money
According to Lee Chi Shing, CEO of Hong Kong Property, one of the city's four leading property agencies, the purchase rate for mainland buyers in the first half of this year was 30 percent higher than in the same period last year. For new homes, mainland buyers make up one-third of the market share and the figure is also higher than that of last year.
Hong Kong Property and others like it, such as its rival, Midland Property, are cashing in on the market by organizing property tours for mainlanders. The tours include free transportation, meals and "professional investment consulting."
Following the start of eight-day National Day holiday Thursday, the Hong Kong property has become even more attractive, with at least 350 tours heading south for property investment opportunities.
On September 27, the Wen Wei Po, a Hong Kong newspaper, reported that Cheung Kong Limited reserved 10 four-room apartments at Celestial Heights in Ho Man Tin, with prices ranging from HK$25 ($3.225 million) to HK$32 million ($4.128 million) for mainlanders expected over the National Day holiday.
The companies also prefer to employ Mandarin speakers as well as those who know some local dialects to make the mainland customers feel more at home.
Hong Kong companies tend to favor mainland investors because they are often able to pay at least half of the property price upfront, said analysts.
No 'ban' on Hong Kong buyers
The Cheung Kong Limited, owned by tycoon Lee Kai Shing, declared recently that a luxury property area in Hong Kong's posh Midlevels area is only targeting mainlanders, not locals. It generated some anger among Hong Kong buyers.
Cheung Kong explained that the property was sold to an American pension fund last year and the fund asked them to help resell it to mainlanders because they thought they would be more likely to pay a higher price.
The company further stressed that the situation was about business, not discrimination against local buyers, and vowed that there was no "ban" against them.
According to Sze Wing Ching, chairman of Hong Kong property giant Centaline Group, though the city's unemployment rate has been rising, housing prices are continuing to climb, boosted largely by mainland purchasers who've been contributing significantly to the property market's rebound.
Sze said that mainlanders make up 30 to 40 percent of Centaline's luxury home market and 10 percent of its ordinary housing market.
He added that the mainland's strengthened economy means Hong Kong residents would face increasing competition when it comes to buying homes. For most young Hong Kong professionals, this is not good news.
Many in their early 30s have saved money for years to buy their first home, but still can't afford it and have complained that they will have to wait even longer before they realize their housing dream.
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