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Hong Kong’s Property Market Gets Hot With Chinese Investors, Foreigners Stay Away

Hong Kong’s Property Market Gets Hot With Chinese Investors, Foreigners Stay Away
After investment activity in Hong Kong was suppressed because of anti-government protests last year, the city’s commercial property market is being scoured by Mainland Chinese investors after prices dropped by 30 per cent.
With China recovering from the impact of the novel coronavirus pandemic and is ready to deploy liquidity, property agents expect inflow of Chinese capital into Hong Kong and prop up the sector. It was Mainland Chinese investments that have helped to transform Hong Kong into one of the most expensive property markets of the world.
According to reports quoting agents and filings, at least two office towers and one hotel building worth HK$4 billion in total have been snapped up by buyers from Mainland China in the month of August alone.
"A majority of recent large-value building deals were bought by Chinese investors; their number has really grown in the third quarter," said Reeves Yan, head of capital markets at CBRE Hong Kong. "They're looking for bargains ... and they're confident in Hong Kong in the long term."
This uptick in demand for Hong Kong’s commercial property happens at a time when the controversial and sweeping new national security law has been imposed on the city by China which is a necessity to ensure its stability and prosperity according to authorities in Beijing and the financial centre.
"We expect to see more mainland investors coming to buy land," said Dennis Cheng, senior sales director at Ricacorp (C.I.R.) Properties. "If Hong Kong gets more stable in the next few months after the national security law, we expect more mainland companies to open branches here, and that will help the office sector to recover."
In stark contrast to the investors from Mainland China, foreign investors have stayed away till now form investing in property in Hong Kong because of the increasing concerns about the future of the city under Chinese rule. According to critic of the new legislation imposed on Hong Kong, the move has pushed the former British colony onto a more authoritarian path after month off pro democracy protests, which sometimes also turned violent, since last year.
"Foreign investors are still absent. I spoke to two foreign funds recently who said they won't consider Hong Kong at the moment because the political risks are relatively high now," said Daniel Wong, CEO of Midland IC&I.
One land parcel each for HK$5.6 billion and HK$3.7 billion, was bought state-owned China Mobile and a consortium led by Chinese major developer Vanke respectively in July. They were the first mainland Chinese companies to win public tenders since January.
In the Hong Kong leasing and investment markets it expected mainland capital will become "the next wave of demand", said Colliers, which is supported by cross-border financial initiatives in stock and wealth management as well as the large capital pool for fund-raising of the city.
According to reports last year, a call on the biggest Chinese state firms to implement a more active role in Hong Kong as given by China, which include stepping up investment. That would help to assert more control of companies to help cool last year's political crisis.

Christopher J. Mitchell

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