35% of luxury HK flats sold to China buyers

HONG KONG: More than one in three new luxury flats in Hong Kong were bought by China buyers in the first half of this year — a rise of more than 50% compared to the second half of last year. And the trend is set to continue.

"Hong Kong property prices have become around 25% cheaper to China buyers because of the appreciation of the yuan in recent years. It is very attractive to them," said Louis Ng, a director at property agency Ricacorp Properties.

Beijing's new measures to curb property speculation also prompted mainland investors to shift their focus to the Hong Kong market, Ng said.

Research by Centaline Property Agency showed that new luxury units costing more than HK$12 million (RM7.78 million) were the most popular among China buyers. In the first half, about 35.1% of new luxury flats sold in Hong Kong were bought by CHina buyers, up from 22.5% in the second half of last year.

However, in the secondary market, only 16.7% of luxury flats priced more than HK$12 million were bought by investors from across the border. Residence Bel-Air in Cyberport and the luxury housing estate atop Kowloon Station were the most popular among China buyers in the secondary market. Residence Bel-Air saw 23 deals worth HK$582 million in the first half while The Arch on Kowloon Station sold 17 flats totalling HK$298 million.

Wong Leung-sing, an associate director of research at Centaline, said the number of China buyers in the secondary market for luxury flats remained flat since the first half of last year but it continued to rise significantly in the primary market.

In the mass residential market, new homes are still the most attractive to China buyers. About 13.2% of the new mass residential flats below HK$12 million were bought by mainlanders in the first half of this year, up slightly from 11.9% six months ago.

China buyers accounted for only 5.8% of the flats sold in the second-hand mass residential market in the first half, compared with 5.7% six months ago.

Ng of Ricacorp estimates that fewer than 10% of his China clients bought flats for immigration purposes and believes the influx of mainland buyers would continue despite the temporary removal of real estate from the investment asset classes under the Capital Investment Entrant Scheme.

"Most of them bought the flats for long-term investment purposes or for personal use. They will keep the flats even if property prices rise sharply. You can see the number of flats in the estate on Kowloon Station available for sale has been decreasing as mainland flat owners are reluctant to sell. They are proud to own a property in Hong Kong," he said.

In view of Beijing's strict foreign currency controls, mainland investors have to resort to credit card transactions, fund transfers between companies trading in Hong Kong and the mainland, parallel accounts, the underground banking system and currency smuggling to be able to buy properties here. — South China Morning Post
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