The southern Chinese city of Huizhou could become a “paradise” for investors from nearby Shenzhen after the latter tightened its rules for home purchases last week, and with the travelling time between the two cities set to be cut by half next year. Home prices in Huizhou saw the second-biggest gains in mainland China, climbing 6.7 per cent between March and June, when sales offices reopened in the wake of Covid-19 lockdown, according to Centaline Property’s Greater Bay Area (GBA) price index. But they are still about a quarter of the prices in Shenzhen, whose house prices shot up 8 per cent in the same period. Huizhou, where there are no restrictions on home buying, is one of three cities that are at their highest levels since March 2016 when Centaline started gathering home prices in the bay area. “People in Shenzhen are known for their active investment in stocks and property. Last week’s newly introduced restrictions on home purchases for local residents will spur property investors to look for alternatives in nearby cities like Huizhou,” said Andy Lee Yiu-chi, chief executive for southern China at Centaline Property Agency. From last week, residents with “hukou” in Shenzhen will be only be allowed to buy a home if they have held the so-called local household registration paper for more than three years, according to a statement published by the Housing and Construction Bureau. Previously, people were allowed to buy a home as soon as they had obtained the hukou documentation through their employers. Families will be restricted to owning two homes, and single people to just one, the bureau’s statement added. The latest attempt to rein in demand comes after home prices in Shenzhen rose 12 per cent on average in the 12 months to May, outpacing gains in 70 major Chinese cities tracked by the National Bureau of Statistics. ‘China’s Miami’ in Huizhou beckons to Hong Kong retirees About 20 to 30 per cent of new homes in Huizhou are bought by investors from other mainland Chinese cities, mainly Shenzhen, Lee said. Sales of mainland Chinese homes to Hongkongers had nearly ground to a halt since March when the Guangdong government imposed a 14-day compulsory quarantine to reduce the risk of spreading coronavirus. The average home price in Huizhou is 10,000 yuan to 13,000 yuan per square metre, compared to an average of 50,000 yuan in Shenzhen, said Lee. “Because of the high investment cost in Shenzhen, Huizhou is a paradise to [investors] within the GBA,” he said. The total transaction value for new homes in Huizhou rose 2.3 per cent to 71.3 billion yuan in the first half of this year even as the number of deals fell 8 per cent to 55,781 units, according to data from Centaline. Hong Kong buyers nudge bay area home prices to new heights The rise in transaction value was mainly because the average selling prices moved up 8.8 per cent to 12,203 yuan per square metre in the first six months of 2020. “[Investors] are betting home prices in Huizhou will grow further because of the proximity to Shenzhen and the overall improvement in infrastructure,” he said. The GBA refers to the Chinese government’s scheme to link Hong Kong and Macau with nine neighbouring cities in Guangdong – including Guangzhou, Shenzhen and Zhuhai – to form an integrated economic and business hub. Next year, the travelling time between Shenzhen and Huizhou will be cut to 30 minutes from an hour with the opening of the Ganzhou-to-Shenzhen high-speed rail link. Besides investors in Shenzhen, the opening of the high-speed train’s Huizhou South Station in 2018 that reduces the journey to 70 minutes from West Kowloon has encouraged buyers from Hong Kong. Monica Chen, a mainlander in her late 30s who works in Hong Kong, paid 2 million yuan in cash for a 1,614 square feet, three bedroom apartment at Feicuishan, in Huizhou two years ago. She wanted to see more of her parents, who live in Beijing, but could not possibly afford to buy them a place to visit in Hong Kong or Shenzhen. “I bought the flat because of the affordable price and the convenient [journey] to Hong Kong,” she said. ”It is mainly for my parents so they can stay close to me. I can visit them at the weekends.” With this budget, she said she could only buy a 200 square foot flat in Shenzhen. “I have another friend bought one after me for their parents as well,” she said.