China’s rich are snapping up properties all around the world, according to a feature in today’s WSJ. With all the cities in the world from which to choose, why is Hong Kong so popular? It has to do with the rule of buying what you know: Hong Kong is the most popular destination for Chinese tourists – it’s nearby and it’s a city where many speak Mandarin. What’s more, the rising yuan goes a long way in Hong Kong, a special administrative region that remains nominally under Chinese rule but whose currency is pegged to the U.S. dollar.
Samson Law, managing director of Sotheby’s real-estate division, adds that China’s recent measures to cool its property market—including limits on multiple-home ownership and higher interest rates—have prompted wealthy Chinese investors look outside the country. “What’s the next step after China? Hong Kong,” he says. “Then later, they’ll look to buy overseas, in London, New York or in Australia.” The surging demand from China, especially for luxury properties, has prompted the high-end real-estate divisions of Sotheby’s and Christie’s to set up Hong Kong offices.
These buyers aren’t buying just any homes —they’re buying the most expensive in town: In Hong Kong, buyers from China make up 28% of the transactions for properties that are priced at 12 million Hong Kong dollars (US$1.5 million) and higher. Apparently, Chinese shoppers are most interested in luxury addresses—the Peak and the southern side of Hong Kong Island are top choices for those with sky-high budgets. Neighborhoods with convenient transportation links back to China rank high as well, Mr. Law says. West Kowloon is prized because it sits above an Airport Express station, for instance, and Hung Hom is close to the train terminus that links Hong Kong to Shenzhen and Guangzhou.