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China security law has limited impact on Hong Kong property market
EARLY signs of any impact on the property market from Hong Kong's new security law have been muted with sales and home-price data barely flinching.
The law, which came into effect on June 30, allows authorities investigating national security matters to freeze assets and seize property.
That has sparked concern that Hong Kong, long one of Asia's premier financial cities, will become a less desirable place to live and work. Australia's government earlier this month advised its citizens against travelling there.
But property agents on the ground say the city's residential market, at least for now, has enough local support.
"Political events usually don't impact Hong Kong's residential market" much, said Sammy Po, chief executive officer of Midland Realty International's home division. Low interest rates, limited supply, and abundant capital have a more significant effect, he said.
Local dollar deposits in Hong Kong increased 0.1 per cent to HK$6.9 trillion (S$1.24 trillion) in May from April, Hong Kong Monetary Authority data released last month show. Foreign currency deposits declined 0.6 per cent during the same period.
"Pent-up demand remains strong. Those staying in Hong Kong still have a housing need," Mr Po said.
Data does seem to bear out those sentiments. Weekend sales of existing apartments dipped in May as large-scale demonstrations protesting China's planned imposition of the security law erupted, but picked up again in June.
Similarly, secondary home prices have landed broadly in the same territory.
While the luxury end of the market may feel the pinch in the short term with some sellers offering discounts of about 10 per cent, longer-term buyers will prioritise stability and the ability to turn a profit, said Howard Chu, a senior sales manager at Midland who oversees prestige homes.
"The most important thing for Hong Kong is its stability and continued success," said Nick Loup, group vice-chairman at Chelsfield Group, a London-based property developer and investor with around US$5.5 billion in assets under management.
"One of the reasons it has always been successful is the high level of transparency, the excellent legal system and the rule of law."
He said that the new security regulations could restore the city's stability, adding that Chelsfield is interested in investing in properties valued between HK$300 million and HK$5 billion. BLOOMBERG