Immigrating to Hong Kong without owning property can be somewhat uncomfortable; even the smallest space should be a personal haven. So, what advantages does Hong Kong real estate offer? How does it compare to real estate in mainland China in terms of potential?
Mainland residents are aggressive.
Due to historically low interest rates and strong demand from the mainland, property prices in Hong Kong have reached historically high levels, surpassing the peak of 1997. After a 30% increase in average apartment prices in 2009, there was another 24% increase in 2012, placing Hong Kong at the top of the global price increase list. The soaring property prices are closely linked to the rising land prices.
In Hong Kong, properties valued at over 12 million Hong Kong dollars are classified as luxury homes. Units exceeding 100 square meters are considered exorbitantly priced luxury homes by many ordinary families in Hong Kong, yet they are the preferred choice for buyers from the mainland.
According to statistics from Hong Kong real estate research, since 2007, the proportion of mainland buyers purchasing first and second-hand luxury homes in Hong Kong has nearly doubled. It is reported that from 2012 to the present, 30% of buyers of luxury homes priced over 12 million Hong Kong dollars on Hong Kong Island are from the mainland. These luxury homeowners typically have a net worth of 60 to 70 million Hong Kong dollars, according to industry insiders.
Four Reasons to Buy Property in Hong Kong
Why do so many mainland residents continue to flock to Hong Kong to buy property? Aside from immigration factors, the main motivations for mainland residents to purchase luxury homes in Hong Kong are to hedge against domestic inflation and to seek asset preservation and appreciation.
★ Purchase Restrictions in Mainland China
The mainland real estate market is subject to "purchase restrictions," and after a prolonged period of price increases, the potential for further growth has been constrained, prompting investors to seek new investment directions.
★ Attractive Exchange Rate Differences
Since December 2008, Hong Kong's benchmark interest rate has remained at historically low levels for nearly 20 years, reducing the cost of home buying to an all-time low. Coupled with the appreciation of the Renminbi, repaying loans in Hong Kong with Renminbi is equivalent to a 15% discount.
★ Familiarity with the Market
The enthusiasm of mainland clients for Hong Kong real estate is related to the investment principle of "buying familiar things." Hong Kong is the most popular destination for mainland Chinese tourists, being close in proximity and sharing a common language, making it evidently more internationalized compared to Beijing and Shanghai.
★ High Demand and Limited Supply
With an area of 426 square miles, Hong Kong has a high population density and limited land, resulting in high demand and low supply. Therefore, property prices in Hong Kong are expected to grow faster than in other countries and regions around the world.
