City ranked 11th place in terms of investment prospects: PwC survey

Hong Kong's pricey real estate market has become less attractive than those of its peers in the region such as Jakarta, Shanghai and Singapore, according to a survey conducted by PwC and Urban Land Institute (ULI) among property professionals who ranked the city's property market in 11th position in the Asia Pacific region in terms of investment prospects.

The latest round of quantitative easing in the US has generated significant hot money flowing into the city's real estate sector, mostly into the residential sector, pushing Hong Kong's home prices to among the world's highest level these days and making it less attractive compared with properties in other regional economies, according to Emerging Trends in Real Estate Asia Pacific in 2013 released in Hong Kong on Monday.

Hong Kong's latest 11th investment prospects ranking in the region improved from the 13th place last year, when the city's property investment prospects started deteriorating notably. Between 2008 and 2011, the investment prospects of the city's property sector were always among the top five cities in Asia.

Jakarta, Shanghai and Singapore topped the chart in terms of property investment prospects for 2013 in the report. Beijing ranked 7th, followed by a number of Chinese second-tier cities such as Chongqing,Tianjin and Shenyang, which took the 8th spot. Taipei, Guangzhou and Shenzhen obtained 9th, 15th and 16th rankings, respectively, among the 22 cities surveyed in the region.

Hong Kong also leads the "sell" rating in the residential apartments throughout the region, while residential homes in Jakarta are deemed to be the most worthy to purchase these days, said the report. Government figures released in November said Hong Kong home prices have lifted some 20 percent in the first nine months of 2012, surpassing the previous peak in 1997 by around 26 percent.

K K So, a partner of PwC's real estate tax team of the region, said the city's attractiveness has been distorted further today given the survey on some 400 property-related professionals was primarily conducted in September, while the government initiated a new round of curbs in the market in late October.

The latest measures include the imposition of a 5-percent rise in punitive stamp duties - ranging from 10 to 20 percent on short term home resales within a three-year period, and an additional unprecedented 15 percent Buyers' Stamp Duty (BSD) on home purchases by companies and non-Hong Kong permanent residents, which is a temporary measure by the government to suppress demands that should not last too long, So said during a media briefing in Hong Kong on Monday.

As speculative investment activities in residential markets are basically extinct, it is likely to switch the focus of hot-money into commercial property assets in the city.

However, given that prime office buildings in Hong Kong are also among the world's most expensive while major shipping districts are "closing in on New York's Fifth Avenue as the world's priciest locations," the report estimates that hot-money will primarily flow into second-tier places such as Kowloon in the future.

litao@chinadailyhk.com

(HK Edition 12/04/2012 page2)