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First property sales curb on non-HK buyers

Publication Date : 07-09-2012

 

Non-Hong Kong residents will be barred from buying properties in two private developments to be launched in Kowloon East, an up-and-coming district popular with buyers from the mainland.

This is the first time that the Hong Kong government is dictating whom property developers can sell to.

With the move, some industry players reckon that prices at the two projects, which will be launched early next year and yield 1,100 units, may be about 20 per cent lower than those of neighbouring homes.

Chief Executive Leung Chun Ying yesterday evening fleshed out the details of a controversial proposal he had flagged when announcing moves to cool the housing market last week.

"Land for housing in Hong Kong is a rare resource," Leung said. "When we decide on how to use it, we need to make sure we are satisfying the needs of Hong Kong people first."

To prevent abuse, Hong Kong buyers will not be allowed to sell their units to foreigners within 30 years.

The local property market has seen prices skyrocketing 85 per cent in just 21/2 years. Mainland Chinese, whose purchases make up about 40 per cent of luxury home transactions and 10 per cent of overall home sales, have been blamed for driving up prices.

Singapore restricts the sale of landed property to foreigners, but does not set any limits for private apartments.

The new policy has caused some unease over its impact on Hong Kong's reputation as a free market. But some believe that it may cool the market.

Kowloon East is being redeveloped as Hong Kong's second central business district, providing an alternative to the existing business districts of Central, Admiralty and Wan Chai. The two land sites are located near the former Kai Tak airport, where a ferry terminal is also being built.

Analysts tell The Straits Times that mainland Chinese comprise 20 per cent to 30 per cent of buyers of units in new projects there. They now sell for at least HK$10,000 (US$1,300) psf.

Midland Realty sales director Angela Kwok believes prices at the two new land sites could be 20 per cent lower.

Said Derek Cheung, a former analyst with DBS Vickers: "The 30-year limitation will have its impact on the market. It would serve as a kind of subsidy by reducing competition."

But he cautioned: "In the long run, it depends on the extent of the policy - for now, it's just 1,100 units."

Vincent Cheung of real estate broker Cushman and Wakefield pointed to pent-up demand among Hong Kongers. "Would you price it lower if you are the developer?" he asked.

 

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