Hong Kong’s in bubble trouble
Tales of HK$100 million ($12.9 million) parking lots and 15% tax hikes on foreign property investment in Hong Kong mean it’s finally time to worry about its property markets.
The surge in off shore property investment and government intervention in the market, attempting to puncture the bubble is fuelling growing speculation and concern in it collapsing.
Up until now analysts have been confident of continued growth within the administrative region.
Outside the commercial market, indicators from the residential market showed a 20% rise in prices in the opening nine months of this year surpassing 1997’s watermark of 26%.
Early in October the Hong Kong Government introduced a 15% tax increase on foreign property investment in a bid to deflate market prices.
The flood of ‘hot money’ into Hong Kong is catapulting its commercial and household property prices to record highs, with its residential markets already known to be one of the most expensive in the world.
There has been a 50% increase in sales of new parking spaces bought by property investors with the average price for each space now higher that the cost of a small apartment in some areas of Hong Kong estimated at HK$3 million.
Hong Kong leader Leung Chun-ying said: "It's a simple logic for investors: if you don't allow me to buy residential properties, then I will turn to parking spaces, and it's still more profitable than putting money in the bank.
"Capital is flowing into Hong Kong, into its property market. Some people buy luxury properties, we've seen soaring prices there ... money is also flowing into shops, commercial premises and car parks,"
SOS recently reported that property prices were projected to double in Hong Kong by 2020. Recent indicators suggest that this could be a false dawn for the region’s property market.