Stock market gloom, a dropping yuan and slowing growth rates are pushing wealthy Shenzhen investors to put their money into what they think is something stable: the Hong Kong property market.
As the exchange rates of the yuan drop, a growing number of Shenzhen residents have traveled across the border to purchase high-end properties in Hong Kong, Shenzhen Economic Daily reported.
To a large extent, the trend was a result of the devalued RMB. Since the Hong Kong dollar is pegged to the U.S. dollar, the yuan devaluation is pushing more mainlanders to raise the percentage of overseas assets.
“Ten percent of the buyers are from the Chinese mainland. Usually the percentage is 3 to 5 percent,” said Kwok Chi-wai, a member of the board at Cheung Kong Holdings Ltd.
Jiang Shaojie, general manager of Midland Shenzhen and Huizhou, believes the stock rout and yuan devaluation caused investors to change investment strategies.
“Formerly Shenzheners would choose to buy apartments that cost from HK$5 to HK$8 million (US$645,000 to US$1.03 million) , as investments. Now they purchase those worth more than HK$10 million for themselves,” said Xie Kakang, a member of the board from the housing site qfang.com. “And Hong Kong developers get rid of a 15-percent stamp duty especially for mainland buyers.”
It is believed the trend will continue, with Hong Kong witnessing a higher number of mainland buyers in the second half of 2015.
Statistics from Midland Holdings show that among the buyers of newly developed apartments worth HK$10 million and higher in the first quarter of 2015, 41.3 percent were mainlanders. As for the pre-owned housing market, the number was about 12.8 percent.
For HK$5.51 million, a Shenzhen buyer recently bought five 71-square-meter apartments from a housing estate called Central Link, developed by Sun Hung Kai, in Tung Chung, Hong Kong. The buyer, who was not identified, already has a Hong Kong ID.
Two other Shenzhen buyers bought two high-end apartments from Nova at Hong Kong Island and Pacific View. They are worth HK$12 million and HK$17 million, respectively.
Housing estates developed recently like Stars by the Harbor were also popular. Seventy percent of the 120 apartments it brought to market, with an average price of HK$22.5 million, sold out. “The exchange rate of the Hong Kong dollar is not that volatile. The value of Hong Kong housing properties is much more guaranteed,” said Dong, a Shenzhen buyer.
Kwok said high-end properties will be more popular in coming months, since the U.S. might not raise the interest rate within the year.