Tsing Yi to become real estate drawcard

PUBLISHED : Monday, 22 January, 1996, 12:00am
UPDATED : Monday, 22 January, 1996, 12:00am

IN the future Tsing Yi is going to be a centre of the Hong Kong residential property universe.

There is not much now on Tsing Yi except for a lot of industrial space.

Credit Lyonnais Securities Asia says in a report that in the first of a series of changes, this area will become a main trunk route linking the new airport, on northern Lantau, with the Kowloon mainland.

It will also be a linking point where Route 3 drops down from Yuen Long, passes through Tsing Yi and joins the Kowloon mainland at Kwai Chung. An expressway from the new airport will also link up with Route 3 at Tsing Yi. Another expressway from this new connecting hub will travel south and split, branching out to the east side of Kowloon and south with an expressway tendril heading under the harbour to Western on Hong Kong Island.

The infrastructure information provided by Credit Lyonnais all comes from the government. It has been issued before in one-off pieces. It is when the information is presented in a consolidated form, showing how all these transport facilities link conurbations beyond the year 2000, that an observer realises the enormity of the changes to come.

Over the medium-term, the report takes a consensus view of the territory's residential property market. Prices will rise over this period and these rises can be expected to closely follow domestic price inflation.

In previous cycles property price inflation has been linked to asset inflation. Contributing to this has been the existence of the Hong Kong dollar peg. This peg has removed the Government's ability to control inflation. Stability of the currency has taken precedence over having an independent monetary policy to that of the United States Federal Reserve.

Other drivers of residential price inflation have been rising population, rising family formation and, of course, a restricted supply of land.

Looking ahead, these factors will continue to affect residential prices. New road and rail links are going to have beneficial effects on certain areas of Hong Kong. The key areas to benefit, where property prices are due to outperform those of the rest of Hong Kong, are Tsing Yi and Yuen Long.

Of interest is the relationship between per square foot values of small and medium-sized residential units to the time it takes to get to Central. This is a correlation examined at major cities elsewhere around the world as there is normally a strong link. In Hong Kong this link is very strong with the 'R2' value achieved at 0.9, where the maximum is 1.0. The graph, representing this strong correlation is shown on the first map of 'Major road and rail links - 1995'.

Taking this as a yardstick the brokerage looked at the likely impact of the new road and rail link on travel times, taking in many cases government assumptions used by the urban planners. The results show which areas are going to benefit most. The analyst behind the work, Trevor Cheung, concludes: 'Prices of residential flats in Yuen Long, Tsing Yi and Castle Peak Road will take off when the travelling times to these places are significantly reduced.' An extensive rail network work by the year 2001 will also benefit areas like Junk Bay and Ma On shan, Credit Lyonnais says.