The Closer Economic Partnership Arrangement (CEPA), which was signed in late June between the mainland and Hong Kong, will surely positively affect the home market in both the cities, according to Zhang Wei, research chief of Shenzhen Centaline Property Consultants Limited.

Zhang, who works for the Shenzhen subsidiary of Hong Kong Centaline Property, said housing market was one of the main pillars of Hong Kong economy. In light of that, CEPA will be a push to Hong Kong's economy.

Everybody recognizes that the turnaround of its home market will be certain, Zhang said.

As well, CEPA is good news for the Shenzhen real estate market. First of all, Hong Kong developers will be able to do their jobs in Shenzhen and other areas of the mainland independently. Without CEPA, however, they would have to enter into joint ventures with mainland developers for housing projects.

Statistics show that up by the end of last year, 55 Hong Kong- based companies had developed more than 64 million square meters of housing projects on the mainland. But not a single square meter was developed by a Hong Kong company alone.

No doubt CEPA will bring more benefit to Hong Kong developers as far as the mainland market is concerned.

"Hong Kong developers are of higher level than their mainland counterparts, for they have wider horizon and better professional skills,"Zhang said, adding that CEPA would give them an edge in developing mainland market.

But another industry expert insisted that mainland developers should not be pessimistic.

"With years of accumulation of experience, developers in such cities as Shenzhen, Guangzhou and Shanghai are almost on a par with the Hong Kong developers"he said."More competition will only serve to raise their level. As a result, their products will be the same as or probably better than those in Hong Kong."

The expert noted that CEPA would also send more Hong Kongers to work on the mainland. The result will be that they will buy more homes on the mainland.

He noted that CEPA allows Hong Kong people to operate retail business independently in mainland cities. A survey by Shenzhen Centaline shows that 60 percent of those surveyed in Shenzhen and Hong Kong believed that there would be more Hong Kongers working in Shenzhen. In the same survey, 60 percent of the people surveyed predicted more Hong Kongers would buy homes in Shenzhen.

CEPA has opened many service trades which were previously off-limits to Hong Kongers. For instance, dentists and lawyers will be allowed to work on the mainland. While these professions usually make the main body of consumers of the upscale market, it is expected that Shenzhen's luxury homes will find an improved market.

In the past, less than 10 percent of the Shenzhen properties sold to Hong Kong people were for stores. Before CEPA, a Hong Konger could not operate a store independently on the mainland. Therefore, many of them had to open businesses in the names of a local friends or relatives.

"With CEPA liberalizing this sector of the market to Hong Kongers, certainly more Hong Kongers will buy space (in Shenzhen) to open stores,"Zhang Wei said.

Another survey by Shenzhen Centaline shows that 38 percent of the people surveyed believed that Hong Kong people would buy more office space in Shenzhen, while 18 percent were sure that they would buy more store space.

As far as Hong Kong's real estate market is concerned, Zhang Wei indicated that CEPA might not have direct effect on it. But as consumption is always related to consumers¡¯confidence, a CEPA-improved Hong Kong economy will boost Hong Kong people¡®s confidence."As a result, the (Hong Kong) home market will pick up,"Zhang said.

Between 1997 when the financial crisis took place and now, Hong Kong's real estate market price has plummeted 60 percent, with few Hong Kongers using it as an investment tool nowadays.

"The drop is largely attributed to Hong Kong people's deteriorated confidence,"Zhang said, citing depreciation of assets, lower income and rising unemployment.

"Among all China's WTO partners, Hong Kong will be the first entering the mainland market tariff-free. Given the size and potential of the mainland market, there will be no reason that it will not help the Hong Kong economy to grow,"an expert said.

Editor: James