Hong Kong property

Mainland Chinese buyers stayed off Hong Kong property as yuan weakened

PUBLISHED : Wednesday, 16 November, 2016, 7:52pm
UPDATED : Wednesday, 16 November, 2016, 10:43pm

The share of mainland Chinese buyers in Hong Kong’s luxury residential property transactions declined in the third quarter, according to data by Centaline Property Agency, as the yuan weakened against the city’s dollar-pegged currency.

Mainland Chinese made up 15.8 per cent of buyers during the quarter, 5.5 percentage points fewer than in the second quarter, and the lowest since 2015, according to Centaline’s data tracking the sales of residential property valued at HK$12 million and above.

“An increasing number of local Hong Kong buyers had been buying up luxury homes, diluting the market share of mainland buyers in sales and value,” said Wong Leung-sing, an associate director of research at Centaline.

The renminbi weakened 0.6 per cent against the Hong Kong dollar in the third quarter, extending a trend that’s seen it deteriorating 4.6 per cent in the 12 months to September, making the city’s property more expensive in yuan terms.

Mainland Chinese buyers accounted for as much as a third of all luxury home sales in Hong Kong in both the primary and secondary markets during the second quarter of 2012.

Aggressive bids by some of these buyers were at times blamed for pushing up average prices, setting residential property beyond the reach of many local buyers.

Those days are gone. Total transaction value dropped 6.4 percentage points to 20.4 per cent in the three months to September, from 26.8 per cent in the previous quarter, Centaline said.

Speculative buyers are likely to be further deterred from the real estate market, following the government’s November 5 move to double the stamp duty for second-time and corporate buyers. Mainland Chinese buyers will be subject to 30 per cent stamp duty, from the previous 23.5 per cent.

That has forced some sellers to offer discounts to speed the sales process along.

A 1,300-square-feet duplex at Centre Stage in Sheung Wan sold for HK$36 million after the seller took HK$3 million off the asking price to seal the deal.

Large developers are also offering discounts. Cheung Kong Property Holdings has offered to foot the bill and absorb any additional stamp duty incurred on buying its La Maison luxury villas in Yuen Long. The developer last week extended the same incentive to customers of The Zumurud luxury apartments in Ma Tau Kok.