Hong Kong’s Executive Council has approved the joint checkpoint proposal for the Express Rail Link. The cross-border railway system is expected to start operating in the third quarter of next year.
The Hong Kong government has been promoting the high-speed rail link as a key part of the plans for a “one-hour living circle” and a “three-hour living circle”, bringing great convenience to Hongkongers who want to pursue careers in the mainland.
The rail link may encourage more rich mainlanders to settle their spouses and children in Hong Kong, while they themselves would stay in the mainland. They could commute easily across the border by means of the rail link. This may exert a great impact on Hong Kong’s housing market.
The travel time between Hong Kong and Guangzhou will be reduced from around two hours to 48 minutes through the high-speed railway. A Hongkonger who works near the West Kowloon area may consider moving to an area near the high-speed railway station in Guangzhou. She would only spend one hour in daily commute, which is even more convenient than living in Tuen Mun or Tin Shui Wai.
However, this may not happen in real life. The one-way ticket price to Guangzhou will cost around HK$210, much more expensive than the bus fare to Tuen Mun or Tin Shui Wai. And one needs to spend up to HK$8,400 in monthly transport if she has to travel between Hong Kong and Guangzhou five days a week.
Many of those who do commute between the two cities will probably prefer to take a bus ride, although the daily commute will take longer.
In practice, the so-called “one-hour living circle” is difficult to materialize. Also, housing costs in Guangzhou and Shenzhen are close to the prices in Hong Kong. As such, living in Guangzhou and working in Hong Kong may not be such a cost-saving proposition after all.
It’s the same case with the “three-hour living circle”, which refers to the daily commute to farther mainland cities in the south like Xiamen, Shantou and Nanning.
Nevertheless, the Express Rail Link would definitely facilitate business interaction between Hong Kong and the mainland. For example, management of listed companies can go for a business trip to the mainland more easily, thus enhancing Hong Kong’s status as financial hub and operation center.
More importantly, the high-speed railway is likely to encourage a “half-day living circle” for China’s new rich. It is estimated that the mainland has up to 1.58 million high-net-worth individuals as of the end of last year, each with liquid assets of over 10 million yuan (US$1.48 million), according to a report jointly released by China Merchants Bank and Bain & Co.
And there are 120,000 ultra-high-net-worth individuals who have liquid assets of over 100 million yuan. This group of rich mainlanders would have the incentive to let their wives and children live in Hong Kong for better education and healthcare services. Hong Kong also offers them free internet access without government censorship.
One can travel to most of the Chinese cities from Hong Kong within half a day by means of the high-speed rail link. The cross-border railway will also encourage more mainland high-net-worth individuals to buy a home in the city.
The Hong Kong government has suspended the investment visa program in 2015. However, there are alternative ways for mainlanders to migrate to the city.
Currently, mainland homebuyers in Hong Kong have to pay a 30 percent buyer stamp duty (BSD).
Hong Kong registered 1,317 housing transactions involving up to HK$3.8 billion in BSD in the first half of this year, up 47 percent and 65 percent respectively from the year before.
This article appeared in the Hong Kong Economic Journal on July 26
Translation by Julie Zhu with additional reporting
[Chinese version 中文版]
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