Boom time for first mover

Property | BLOOMBERG 7 Nov 2019

On Saturday morning in Admiralty, on the fringes of Hong Kong's central business district, prospective home buyers crowded around the sales center for housing development One Eighty, brochures and checkbooks in hand.

Within a few hours, developer Three Tops (HK) had offloaded almost three quarters of the 53 mainly one-bedroom units on offer, helping to push sales of new apartments over the weekend to their highest since late August.

The demand - even after months of anti-government protests that have tipped Hong Kong's economy into recession - is testament to the strength and durability of the territory's real estate sector.

Embattled Chief Executive Carrie Lam Cheng Yuet-ngor last month announced plans to support first-time home buyers attempting to break into the world's least-affordable property market, a plan some analysts say will only send prices rising higher.

"Demand for property is still very strong," said Sammy Po, chief executive of Midland Realty International's residential department.

"Because of the current social events, some people are saying they'll emigrate. For those staying, they still have to buy a home."

At least 200 people were arrested and more than 70 were injured over the course of the weekend as protesters blocked roads, as well as vandalizing public facilities and several China-associated businesses.

Just a five-minute drive from Admiralty, tensions ran high as thousands of black-clad demonstrators gathered in Victoria Park chanting anti-government slogans.

Things escalated quickly, with police firing tear gas on Saturday afternoon in nearby Causeway Bay and Central, both of which are key commercial districts for the city.

Citigroup analyst Ken Yeung said home prices that have faltered somewhat - an indicator of secondary private residential apartments dropping for a 10th straight week last week - will start rising again, spurred by Lam's recent policy changes.

Allowing purchasers to borrow up to 90 percent of a property's value to a maximum of HK$8 million, from HK$4 million previously, could unleash pent-up demand, he said.

However, the rising prices will come as bad news for Hong Kong's younger generation, as many young buyers have been struggling to get on the property ladder for quite some time.

While Beijing's encroachment on the city's freedoms is at the heart of the protests, stratospheric home values have also served as fuel for public anger.

"It's too easy to exceed the income cap for public housing, and at the same time, young people can't afford" to buy a private apartment, said Kay Lee, a 25-year-old medical worker who was dressed in black at a rally in Central on Saturday.

Lee said even if she could afford it, she wouldn't buy an apartment in Hong Kong.

"Some may consider owning a home in Hong Kong the most important thing rather than freedom," she said. "It's just a matter of personal preference."

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