Will half-priced Greater Bay Area homes lure Hongkongers?

October 30, 2019 14:03
A construction project in Guangzhou in China's southern Guangdong province. Mainland developers, in partnership with an e-commerce platform, are preparing to roll out huge discounts in a special sale. Photo: Bloomberg

As we head into the shopping season, a Chinese e-commerce giant has come up with a seemingly novel idea to entice wealthy Hongkongers into investing in real estate on the mainland.

JD.com, China’s No. 2 online retail platform, is touting an initiative under which mainland developers would offer properties at half the price.

For Hong Kong people, the discounted home sales program is aimed at those eyeing properties in the so-called Greater Bay Area in southern China.

And yes, it's for cash-only deals.

JD is also offering first-hand and second-hand home units in major cities like Beijing and Shanghai, as well as in some hot overseas spots such as Britain, Japan and Thailand – but not at half-price.

The housing sales promotion comes as the world prepares for the Thanksgiving shopping spree and as China gears up for its own special online retail fest -- the Singles' Day event -- next month.

While the price details are still under wraps, there is much speculation as to what sort of discounts the developers will offer to overseas buyers on the online site famous for selling handsets and home appliances.

Well, just as the case with supermarkets, it is a fairly common practice among sellers to mark up before offering hefty discounts. So it may not be wise to get carried away too much on the advertised numbers.

That said, there could still be some pretty good deals for prospective buyers.

For Hong Kong people, investing in a home in Greater Bay Area cities on the mainland could be an interesting prospect given the uncertainties surrounding the property market in their hometown.

Despite low interest rates and the recent easing of mortgage rules, many prospective buyers are refraining from home purchases in Hong Kong because of the ongoing social unrest in the city.

As the crisis, marked by violent anti-government protests and street clashes, shows no sign of coming to an end anytime soon, people are increasingly looking at overseas markets.  

Real estate consultants have reported a surge in inquiries from Hong Kong people in recent months about investment options abroad.

Malaysia, which is dangling fast-track residency visas for foreign home buyers, has become an attractive option for many Hongkongers. So is the case with some European Union countries such as Portugal.

Now, with regard to the Greater Bay Area, it is open to question as to how many Hong Kong residents will really opt for investing there despite the steep discounts on offer.

Given the current political turmoil, the term 'Greater Bay Area' has become a dirty word in the eyes of many Hong Kong people.

Also, the excitement over enhanced transport links brought on by the high-speed rail and the Hong Kong-Zhuhai-Macau has worn off.

Passenger throughput at the new rail facility has been way below projections, and traffic on the cross-sea bridge was also nothing to write home about.

Given this, will the mainland home fire sale now really bring excitement?

Watch this space!

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RC

EJ Insight writer