Hong Kong property

Where to get a HK$1 million flat? Best try overseas, agents tell young flat buyers in Hong Kong

A growing number of young people are seeking out real estate in value markets overseas, agents say

PUBLISHED : Wednesday, 29 November, 2017, 8:01am
UPDATED : Wednesday, 29 November, 2017, 10:35am

Twenty and thirtysomethings who’ve struggled to get on the property ladder in Hong Kong are turning to more affordable options overseas, according to industry experts.

Many are seeking to acquire real estate in urban centres around the region that haven’t seen such huge run-ups in prices, but which stand to appreciate over time.

In some cases, the idea is to cash out eventually and use portfolio gains to buy back into Hong Kong.

“In the past three to four years, because of the high property prices in Hong Kong, many young people cannot afford it here and see some opportunities in places like Japan or Thailand,” said senior director of Knight Frank Hong Kong, Thomas Lam.

He said the developing trend is a departure from the usual practise of wealthy Hong Kong individuals investing in overseas havens such as London or Sydney.

Lam said individuals in their 20s and 30s are buying abroad for investment purposes.

“For many young people, their budget is less than HK$3 million (US$384,452)”, which would buy a small to medium sized second-hand flat in Tokyo or Bangkok, Lam said.

Other property agents said a global outlook and a sense that better value can be had in other markets were important factors in decision making.

“I don’t think there is any place in the world where young buyers are more savvy than they are here,” said Zackary Wright, executive director Asia Pacific and Western North America for Christie’s International Real Estate. “They will invest in a flat in London, Tokyo, Bangkok. They’re building a portfolio of real estate.”

While Tokyo is a major draw for young buyers, Bangkok has recently taken the spotlight as “probably the hottest market in Asia,” Wright said.

“You can buy ultra-luxury at a bargain price. If you live in Hong Kong, you can be a king in Bangkok,” Wright said.

He said flat residences in the Thai capital operated by the Four Seasons Hotels and Resorts and Ritz-Carlton were among trusted brands drawing attention from Hong Kong buyers.

“The prices are just so high, this market [Hong Kong] is out of reach for so many people,” Wright said.

Centaline Property Agency, which holds overseas property shows in its exhibition centres in Causeway Bay and Tsim Sha Tsui every week, said Thailand, Japan and Taiwan were favoured among younger buyers.

“Flats in Bangkok and Taiwan which cost from HK$1 million to HK$2 million are most popular among Hong Kong buyers,” said Louis Chan Wing-kit, Asia Pacific vice-chairman at Centaline Property Agency.

Foreign exchange volatility, including drops of about 20 per cent against the US dollar for the Thai baht and the British pound have helped fuel international bargain hunting, he said.

“Buyers purchasing overseas properties are seeking homes either for their children studying in Australia, US and UK or for diversification,” he said.

Home prices in Hong Kong have rise 10 per cent in the first nine months of the year, according to recent data from the Rating and Valuation Department.

Since 2003 Hong Kong home prices have risen 430 per cent, making the city the most expensive place to buy a home among 406 urban centres tracked by the Demographia International Housing Affordability Survey.

But the trend of buying real estate overseas has raised concerns about legal protections.

Data released in March last year showed around 1,000 investors from mainland China, Hong Kong, Taiwan and Malaysia were directly affected by stalled overseas property projects valued at HK$500 million.

Last week Legislative Council member for New Territories West Chan Han-pan raised questions on regulations safeguarding Hong Kong buyers investing in properties abroad.

Meanwhile, Wright said his company has refused to represent some property projects overseas after conducting risk assessments.

“People come to [Christie’s] because they don’t want that to happen so we have to do our due diligence and homework of the developer and the project itself,” Wright said.

Chan said Centaline conducts background checks on real estate developers and refuses to promote property developments that are deemed too remote.