Coronavirus Hong Kong: luxury property awaits Shenzhen border opening for the next leap upwards
- Property buyers from mainland China bought 38 per cent of Hong Kong’s luxury homes – each more than HK$100 million – in the first four months
- At two of Hong Kong’s most exclusive addresses, 21 Borrett Road and Mount Nicholson, “new Hongkongers” already make up more than half the owners
An influx of mainland Chinese buyers into Hong Kong’s super-deluxe developments since early this year could further fuel home prices in the world’s most expensive property market, and the trend will become more obvious once the border open.
Buyers who settled in Hong Kong from mainland China, dubbed “new Hongkongers” unlike locally born residents, have already made their presence felt in the local real estate market. They bought 38 per cent of Hong Kong’s luxury homes – each priced more than HK$100 million (US$13 million) – in the first four months, 2 percentage points more than the whole of 2020, and more than 32.9 per cent in 2019, according to data provided by Midland Realty.
“When the border reopens, we expect mainland Chinese to [return] to snap up residential property,” said Avan Pau, senior director of investment property & private office capital markets at CBRE Hong Kong.
New Hongkongers already make up 60 per cent of the owners in two of the city’s most exclusive residential neighbourhoods: CK Asset Holdings’ 21 Borrett Road luxury apartments at the Mid-Levels, as well as Mount Nicholson on The Peak by Wharf Holdings and Nan Fung Development, according to land title searches conducted by South China Morning Post.
“Some of the rich mainland Chinese businessman share one thought: to send their money out of China to park in a safe place,” said Kevin Tsui, an associate professor at the Clemson University’s College of Business in South Carolina, adding that the influx of mainland capital would cause prices to soar in Hong Kong. “That explains why they are willing to pay for a big premium, or even higher taxes, than local residents for property in Hong Kong and overseas.”
China’s government had also been mounting a series of campaigns across the country to tamp down on runaway property prices, which had added to the push for tycoons to diversify their holdings abroad, he said.
“It is likely encouraging individuals whose wealth quickly accumulated after they float their firms in Hong Kong or in the mainland stock market to seek other investment alternatives. Hong Kong property market is one of their favourite options,” he said.
Payments of the buyers’ stamp duty (BSD), a 15 per cent surcharge on the price of property sold to non-permanent residents with less than seven years in Hong Kong, soared last month to HK$913 million, a 23 per cent jump from April, while the number of transactions jumped 84 per cent to 114, according to data provided by the Inland Revenue Department.
“We also noticed a growing number of mainlanders who become Hong Kong permanent residents making property purchases,” said Buggle Lau, chief analyst at Midland Realty.
Additional reporting by Lam Ka-sing