Hong Kong buyers nudge Greater Bay Area home prices to new heights after easier ownership rules

By Sandy Lisandy.li@scmp.com / https://www.scmp.com/business/article/3047855/hong-kong-buyers-nudge-greater-bay-area-home-prices-new-heights-after?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | February 4, 2020 2:54 PM SGT
China may have fueled a housing boom in the Greater Bay Area with easier ownership rules, as buyers from Hong Kong joined the rush to send home prices in some cities to record highs, according to data from Centaline Property.
An index tracking prices of new and used homes in Shenzhen rose for a fifth straight month in December to cap a 9.4 per cent rally in 2019, according to Centaline Property. Prices climbed 10.5 per cent in Foshan and 7.4 per cent in Huizhou.
The indicators for the three cities are at their highest levels since March 2016 when Centaline started gathering home prices in cities across the southern Guangdong province. On average, prices in the GBA region climbed 5.6 per cent in 2019, while Hong Kong saw a 4.4 per cent gain, Centaline said.
Hong Kong's government unveiled in November a proposal by Beijing to ease home ownership and employment rules for its residents in the GBA region. Before then, some mainland cities imposed ownership buying curbs on Hong Kong residents, including requiring a certain period of residency and taxpaying status.
"The news encouraged more Hong Kong investors to seek homes in the region," said Elaine Cheung, general manager of Centaline's office in Shenzhen. Shenzhen, in particular, saw a 5 per cent jump in the number of transactions in December following the policy relaxation, she added.
The showroom at Yue Infinity project by Yuexiu Property in Panyu district, Guangzhou. Buyers snap up almost all of the 120 units on sale on December 30, 2019. Photo: Sandy Li alt=The showroom at Yue Infinity project by Yuexiu Property in Panyu district, Guangzhou. Buyers snap up almost all of the 120 units on sale on December 30, 2019. Photo: Sandy Li
The Greater Bay Area represents China's economic blueprint to link Hong Kong and Macau with nine Chinese cities in the Pearl River Delta and turn them into a new financial and business hub to rival San Francisco and Tokyo. The region as a cluster made up about one-eighth of China's economy in 2017, with a population larger than the UK and twice that of Canada.
The area is also coveted by British education institutions as they plan more campuses there in the hope of growing a pool talent and investments to support the hub. Ten more schools are expected to open by 2022, mostly in Guangzhou and Shenzhen, to bring the total to 13 in the expanded metropolis.
"We believe the trend for Hong Kong residents to buy in GBA will continue to grow" given its long-term prospects, said Nelson Wong, head of research at JLL in Greater China and Hong Kong. "This is especially so if the housing supply in Hong Kong remains short."
The easier ownership rules have brought a bonanza for some of China's biggest developers such as Country Garden Holdings, China Vanke and Yuexiu Property, who have spent billions to amass land banks in the province ahead of the expected boom.
Country Garden, the biggest developer on the mainland, sees the rush as a developing trend, according to Albert Cheng, group executive vice-president. "Hong Kong buyers would continue buying them as retirement and holiday homes."
The shift in focus to GBA may have been driven by social unrest in Hong Kong over the past eight months, property analysts have said, as Hongkongers started looking for alternative locations for retirement or better employment prospects.
At Yuexiu's project known as Yue Infinity, buyers have snapped up 116 units of the 120 units when it opened for sale on December 30, two weeks after officials confirmed Hong Kong and Macau residents can buy their first homes there by showing their identity cards and cross-border travel permits.
"At the moment, Hong Kong buyers account for only a small number in our new projects" who found out about them by word of mouth, said Jiang Yongjin, general manager of investor relations department. "We will increase our promotional activities to lure more Hong Kong clients to our future projects in the GBA area."
The Yue Infinity project is located adjacent to the Chen Tougang station on the Guangzhou Metro Line, which is about an hour's ride by high-speed train from Hong Kong. At 33,000 yuan per sq m, Yue Infinity was priced at half the rate in Shenzhen and one-fifth of the average in Hong Kong.
"Buying homes in new developing areas along the high-speed rail link or metro queues has become a trend for Hong Kong investors to look for greater upside potential," said Alva To, vice-president and head of consulting in Greater China at Cushman & Wakefield.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.