Shenzhen sells a dream that most can afford

PUBLISHED : Wednesday, 07 July, 2004, 12:00am
UPDATED : Wednesday, 07 July, 2004, 12:00am

Hong Kong people cross the border to take advantage of lower prices and growing links between the two cities

Owning a dream home in Shenzhen is certainly more affordable than in Hong Kong - and it is set to become more desirable, thanks in part to the economic integration between the two cities.

Improved accessibility and attractive financing offers are also spurring demand from Hong Kong for homes in the mainland city.

'The opening of the 24-hour Huanggang checkpoint boosts demand further,' said Lai Kwok-keung, director and assistant general manager of Centaline (China) Property Consultants, adding that Futian was the most popular district among Hongkong people.

'Huanggang is in the Futian district. The convenient transport is bringing more Hong Kong people to Futian for entertainment. Both flat prices and transactions increase steadily there. We estimate a 15 per cent price increase in the past year,' he said.

The number of Shenzhen homes bought by Hong Kong people had soared 54 per cent to 4,000 in the past six months compared with last year, Centaline said. Transactions were valued at four billion yuan.

In the first quarter, 45 per cent of commuters to Hong Kong bought flats in Futian, close to the Huanggang checkpoint, while 37 per cent bought units in Luohu, the agency said.

About 61,800 Hong Kong residents, or 1.1 per cent of the city's population, moved to China by the second quarter of last year, according to a survey released by the Hong Kong Planning Department.

This was 50 per cent more than the 41,300 people recorded in the department's last survey, in 2001.

About 77 per cent of Hong Kong residents live in Guangdong, mostly in Shenzhen, Guangzhou and Dongguan.

In the latest survey, Shenzhen overtook Dongguan as the most popular destination.

It found the main reasons people took up residence in the mainland were 'required by work', 'for retirement' and 'reunion with spouse/children'.

Despite measures by the central government to cool the property market, the market in Shenzhen looked healthier, Centaline said. There will be a slight increase of 5 per cent in the second half of this year in the price of small to medium-sized flats, even though luxury flats are expected to show a 4 per cent to 5 per cent fall, according to the agent's prediction.

The average price for a small to medium-sized flat in Shenzhen is 5,600 yuan per square metre.

The agency said the modest growth was supported by the cooling measures. The supply will drop from last year's 100,000 to between 80,000 and 90,000 units this year. With large-scale infrastructure projects in Shenzhen under way, the agency predicted Hong Kong residents would buy another 7,800 units over the next six months, for a total value of 11.5 billion yuan.

The MTR Corp has obtained the rights to build and operate the second phase of Shenzhen's fourth underground railway line, and to acquire 2.9 million square metres of land along the route for residential development.

'The MTRC will attract other developers, such as Sun Hung Kai, Sino and Kerry Properties, to co-operate and carry out projects in Shenzhen, which is good news. These Hong Kong developers will give Hong Kong people a feeling of familiarity and boost their confidence in Shenzhen's market,' Mr Lai said.

Hang Seng Bank has responded to expected demand by offering mortgages of up to 80 per cent to Hong Kong buyers at interest rates as low as 1.5 per cent below prime, now at 5.3 per cent.

The future of Shenzhen's property market looks promising, but political and cultural differences between the two cities remain.

Property experts highlighted the difference in the legal requirements.

Chang Xiaobo, a lawyer from Guangdong Yatai Law Firm, said: 'The key difference is in the registration system. In Hong Kong, both parties need to go through all procedures through law firms, whereas in Shenzhen it is not necessary. They need to register themselves with the Municipal Administration of State Land, Resources and Housing. Mr Chang advised buyers to consult Chinese lawyers before signing any agreements.

Tips for buyers

Residential land use rights usually last for 70 years.

For primary transactions, buyers must ask developers to present a certificate of land use transfer right; permits for planning and development; and construction and pre-sale agreements.

Buyers from Hong Kong and Macau, and other foreign passport holders, must register with the Municipal Administration of State Land, Resources and Housing.

Before moving in, buyers must get a certificate for residential use and another allowing them to carry out any future renovations.

Before claiming ownership, buyers should pay fees incurred, such as for electricity, water and administration.

Any lawsuits will be enacted in Shenzhen and follow China law.