Hot money spurs developers to rush projects on to market

Property developers are rushing new projects on to the market in response to hot money inflows that are helping to drive prices to record highs.

After rising for four consecutive weeks, the main barometer of house prices, the Centa-City Leading Index, reached a new high of 111.19 for the week ended October 14 - tracking an 18 per cent increase in average prices on the secondary home market so far this year.

According to Midland Realty, residential rents have also risen to a new record of HK$22.90 per square foot - up 14 per cent so far this year.

Vincent Chan Kwan-hing, the chief executive of the residential department at Midland Holdings, said the third round of quantitative easing by the United States Federal Reserve, aimed at boosting the faltering US economy, had triggered a flow of hot money into Hong Kong.

"It is having a positive effect on the city's stock and property markets, and riding on the improved sentiment, developers are speeding up the marketing of new projects," Chan said.

HKR International yesterday sold 20 of 50 flats released at its Amalfi project in Discovery Bay at an average of HK$9,711 per square foot, agents said.

"Cash is no longer king. Strong sales reflect investor and end-user preference for property as a way to hedge against rising inflation," said Louis Ho, a director at Centaline Property Agency.