Why the appetite for overseas properties will grow

March 17, 2017 10:00
Dublin, Europe’s fastest growing economy for three years running to 2016, is drawing more attention from Hong Kong investors. Photo: Reuters.

As sky-high property prices squeezed out many local buyers, real-estate agents have been urging Hongkongers to put their money elsewhere: assets in cheaper overseas markets.

There are no official figures on how much Hong Kong people have spent on overseas properties. But judging from the flurry of promotional activities by real-estate agents, there is no doubt that demand is strong. In recent months, firms such as Centaline, Midland Realty, Colliers and Country Garden have all organized marketing events.

Recently, in Mei Foo, Country Garden hosted a seminar on "The Forest City next to Singapore – for less than HK$1 million a villa overlooking the sea". It offered prices one fifth of that of Hong Kong, with the district joined by a bridge to Singapore.

"Rental income ranks ninth in the world, with prices rising in recent years," the marketing pitch read.

In recent weeks, advertisements circulated in the city and put in letter boxes have offered properties in Taiwan, Britain, Australia, the United States, Jeju island in South Korea, Bangkok and Phuket in Thailand, and even Ho Chi Minh city in Vietnam.

"Who are these for?" said an angry woman named Wong Mei-ying, a pensioner in her 80s who has lived in Mei Foo for 30 years. "They are not for me. I just throw them away."

There are two intended audiences for these pamphlets, said David Leung, a property agent in Mei Foo.

"One audience is Hong Kong people who want to own property but cannot buy one here. So holding one abroad is better than none at all. The other audience is mainlanders with extra money. For them, the priority is getting renminbi out of the country and turning it into a legal asset," he said.

Hong Kong is the main conduit for moving hundreds of millions, if not billions, of renminbi out of China every year. Many mainlanders have bought property here and have spare cash, and in some cases it is relatives here who are on the look-out for foreign properties for people back home in China.

"In their investment choices, Hong Kong people are more conservative. They choose Britain, Australia, the US and Canada, countries with which they are familiar and have links. Mainlanders are more audacious and willing to take a risk. They might buy something in Vietnam, a Communist country, but a Hong Kong person would not," Leung added.

Properties in Guangdong, within a 90-minute travel radius of Hong Kong, are also possible. They mainly attract those who use them as weekend or holiday homes or go there to retire. The risk is over unpredictable policies and controls on converting the money into Hong Kong dollars if you sell and want to take the money out.

Even Dublin, capital of Ireland, is on the radar. "Funds are flocking to Dublin, and property prices are expected to grow eight percent in 2017," said Squarefoot, a Hong Kong property magazine in its March issue. "Ireland was Europe's fastest growing economy for three years running to 2016. It hosts the European headquarters of Google, Facebook and Twitter and is not leaving the EU."

The magazine has articles on property in Birmingham, Liverpool, Tokyo and Bangkok -- all possible destinations for investors. "As Hong Kong topped the list of the world's most unaffordable housing markets for the middle class for seven consecutive years, more Hongkongers are looking into overseas properties to get more of their money’s worth," it said in an editorial.

Buyers have different motives. Some want a better return on their capital than they receive from bank deposits, bonds or shares. Others are looking for a place where their children can live while they study: or a destination for retirement or emigration.

In the last category, Taiwan has attracted much attention from Hong Kong people in the last four years. According to figures from Taiwan's Interior Ministry, 1,086 Hong Kong people emigrated to the island last year, compared to 697 in 2014 and marking one of the highest figures in recent years.

There have been many pamphlets in my letter box for property in Taiwan -- not only Taipei but also Taichung, Kaohsiung, Chiayi and Xinzhuang near Taoyuan airport that will be a stop on the new express train from the airport to the city due to open this year..

Taiwan strictly controls the inflow of mainland money into its property market. "This is good and bad for investors," said Anthony King, an American who spends half the year in Taiwan in an apartment he and his wife bought in Hong Shu Lin, a northern suburb of Taipei.

"Mainlanders have bought properties close to ours but can only live in them a few months a year. The controls keep the prices down, which is good for buyers like us, but not so good if you are buying for investment. As long as the Democratic Progressive Party remains in power, these restrictions will remain in place.”

For Hong Kong people, there is indeed an astonishing diversity of choice – anywhere but at home!

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A Hong Kong-based writer, teacher and speaker.