Property reform will be effective 'only by 1996'

PUBLISHED : Wednesday, 13 April, 1994, 12:00am
UPDATED : Wednesday, 13 April, 1994, 12:00am

MEASURES taken by the Government to curb the escalation in property prices will not be practically effective until at least 1996, according to a consultant.

Assuming the Government imposes a clampdown by supplying more land, Brooke Hillier Parker partner David Faulkner said any extra land administered would not be turned into usable properties until two years later.

There could be some instant psychological effect, he said, but the practical impact would not be felt within two years.

Addressing a property seminar organised by Legal Business in Asia yesterday, Mr Faulkner said he did not predict much upside for the residential market.

''I don't think it can go up much more. It's had a good run,'' he noted.

Mr Faulkner ascribed the dramatic rise in the property market to increased demand from families, a general rise in incomes, and actions by a number of investors or speculators.

Investment had particularly bloated the luxury residential market, he said.

''It's very much an investors' market.'' The low costs of borrowing in the territory gave property investment a relatively high return, Mr Faulkner said.

On office properties, however, Hong Kong would next year become intolerably expensive for corporate occupants, who would begin to move to Shenzhen, he warned.

''In Shenzhen, the occupancy cost is so much lower, and it is near Hong Kong.

''I see Shenzhen developing very much as a secondary centre,'' he said.

He tipped the 1996 rents for Central prime offices to reach $150 per square foot, with those for Wan Chai waterfront offices also hitting $100 per sq ft.

Some corporate tenants might also consider Singapore, where prime offices are rented for only $30 per sq ft, he said.