China threat to property
REPORTS that a mainland consortium has pulled out of a deal to buy a large number of floors of Citicorp Centre in Causeway Bay because of the Sino-British row make worrying reading.
Analysts and investors have been waiting anxiously to see whether a stop would be put on large property investment in the territory while the political dispute remains unresolved.
While the Japanese sold en masse last year because of financial problems back home, the Chinese weighed in as the territory's most prolific overseas real estate buyers.
The level of mainland investment was a reassuring illustration of the mainlanders' faith in the territory's long-term future.
This was especially true because most of the properties bought were either for own use or for long-term investment purposes, rather than trying for a quick killing on the speculative market.
The culmination of their foray was probably the purchase of Nine Queen's Road Central.
A halt or slowdown in mainland buying would have widespread implications, particularly on the office market which has been the focus of their attention.
It has been mainland buying that has helped office sales prices climb to a peak.
Although few expect the mainland companies to begin selling because of recent political events, their absence from the buying arena could accelerate the forecast fall in values which analysts have said is looming on the horizon.
- BARRY PORTER