Chinese buyers benefited from Hong Kong's property curbs removal
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Chinese buyers benefited from Hong Kong's property curbs removal

People watch the sunset over Victoria Harbour from a mountaintop in Hong Kong on March 12, 2024. (Photo: Reuters)
People watch the sunset over Victoria Harbour from a mountaintop in Hong Kong on March 12, 2024. (Photo: Reuters)

HONG KONG: Mainland Chinese buyers are aggressively snapping up new luxury homes worth HK$30 million (140 million baht) or more since the removal of all of Hong Kong's property curbs last month, JLL said.

These buyers have accounted for 70% of the primary sales of luxury residential properties this month, rebounding from less than 50% before the removal of the curbs, the real estate and investment management services firm said in a monthly report on Monday.

"Mainland Chinese buyers have benefited the most from the removal of the cooling measures," Norry Lee, senior director of the projects strategy and consultancy department at JLL in Hong Kong, said in the report.

"With the addition of the Top Talent Pass Scheme, there has been a significant increase in the number of mainland Chinese buyers in the primary market, and these buyers are expected to remain active in the market."

Last month, Financial Secretary Paul Chan Mo-po scrapped decade-old property market curbs in an effort to revive Hong Kong's struggling real estate sector, giving the market an immediate boost. The government withdrew the Buyer's Stamp Duty that targeted non-permanent residents and a New Residential Stamp Duty for second-time purchasers. Also, homeowners will no longer be required to pay a Special Stamp Duty if they sell within two years.

The Hong Kong Mortgage Authority followed suit with its own easing measures. Homes valued at less than HK$30 million are now eligible for 70% mortgage financing, compared with the previous cap of 60% for flats valued between HK$15 million and HK$30 million.

More of the recent primary sales in Grand Homm in Ho Man Tin, and Cullinan Sky and Pann Harbour in Kai Tak, which are worth HK$30 million or more, were from mainland buyers, an industry expert said on condition of anonymity. Mainland buyers favour first-hand luxury homes, but they might not have a particular focus on certain districts, they added.

For instance, in January, a mainland buyer linked to the founder of Mindray Bio-Medical Electronics snapped up an ultra-luxury house on The Peak at a 35% discount. The mansion on 25-26 A&B; Lugard Road sold for HK$838 million, or HK$71,703 per square foot, according to Savills.

The transaction incurred a total of 15% - or HK$126 million - in stamp duties.

Hong Kong's first-hand residential market has seen an immediate uptick since the removal of all cooling measures, as developers have accelerated the pace of new project launches, with some offering additional incentives on top of existing concessions.

As of Friday, about 3,000 transactions have been recorded in the primary market this month, according to Midland Realty. The property agency expects first-hand transactions to reach 4,500 for the whole month, which will be the highest since November 1998.

"Non-local buyers have yet to return in full force due to the heightened foreign exchange restrictions [on the mainland], the rigours of mortgage applications and the property viewing process," said JLL's Lee. "We believe that the overall transaction volume will receive a more significant boost once these restrictions are lifted and the Chinese economy improves."

The current surge in primary property sales is due to two factors, JLL said. These are: significant price corrections, which have seen some projects being priced about 30% cheaper than levels recorded in 2021; and the release of pent-up demand.

"But it's still premature to determine whether the removal of cooling measures could provide long-lasting support to the housing market," said Cathie Chung, senior director of research at JLL in Hong Kong. "While the consensus is that lifting cooling measures will eventually buoy home prices, the immediate future still sees them contending with high mortgage rates.

"We maintain a cautious view on the market outlook."

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