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HK loses shine on high property prices

Karen Chiu

Tuesday, December 04, 2012

Soaring property prices have diminished Hong Kong's allure as one of Asia's top investment destinations, according to a survey.

The yearly survey, titled Emerging Trends in Real Estate-Asia-Pacific 2013, covers 22 Asia- Pacific cities and was conducted by PricewaterhouseCoopers and the Urban Land Institute from September to October.

The survey tries to assess each city's investment prospects in the real estate industry in the coming year.

Hong Kong ranks 11th for 2013, behind Shanghai and Singapore which take the second and third spots respectively. Jakarta tops the list. About 400 property industry professionals from the Asia-Pacific region were interviewed.

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In the previous survey, the SAR was ranked 13th for 2012, down sharply from fourth spot.

Hong Kong home prices are now the world's highest and local grade-A office rents and prices are some of the most expensive.

According to the Rating and Valuation Department, the price indexes for the local housing property market has risen from 100 to 220 since 2009, and office property jumped from 150 to 350 from three years ago.

In particular, the tight supply of office space in the traditional central business districts has boosted prices.

PwC pointed out that hot money will likely flow into commercial property assets, especially second-tier units in Kowloon, due to the government measures on the housing market.

A 15 percent buyer's stamp duty was imposed on the non-locals and corporate buyers from October 27, while the special stamp duty on locals was extended.

So Kwok Kay, Asia Pacific real estate tax leader at PwC, said the drop in home transactions and softening in prices prove that the cooling measures have been effective.

He expects Hong Kong's ranking to fall further as housing curbs deter overseas investments.


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