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HK's property demand remains strong despite protests

Hong Kong

LAST Saturday morning in Admiralty on the fringes of Hong Kong's central business district, prospective home buyers crowded the sales centre for the One Eighty condominium, brochures and chequebooks in hand.

Within a few hours, the 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 the most since late August.

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

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The city's embattled Chief Executive Carrie Lam last month announced plans to help first-time home buyers break into what is the world's least affordable property market - a move some analysts say will only send prices higher.

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

"Because of the 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 injured over the weekend as protesters blocked roads and vandalised public facilities. 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 key commercial districts.

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

Allowing purchasers to borrow up to 90 per cent of a property's value to a maximum of HK$8 million (S$1.38 million), from HK$4 million previously, could unleash pent-up demand, he said.

Rising prices will come as bad news for Hong Kong's younger generation, many of whom have been struggling to get on the property ladder.

While Beijing's encroachment on the city's freedoms is at the heart of the protests, stratospheric home values are also fuelling the 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 last Saturday.

She said that even if she could afford it, she would not buy an apartment in Hong Kong because of the city's gloomy future. "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." BLOOMBERG