Tear gas and water cannon have returned to the streets of Hong Kong. Protests have new urgency as China’s rubber-stamp legislature prepares to pass a resolution on a controversial national security law on Thursday. The city’s developers escaped the worst effects of coronavirus and last year’s political unrest as locals used low rates and housing price declines as a chance to buy. The difference this time is that a fundamental shift in Hong Kong’s economy is starting to take place.
Property prices in Hong Kong’s Central district rose in the first quarter this year. Overall, home prices declined just 1 per cent. The current quarter is off to an even stronger start. April home transactions rose nearly 7 per cent as domestic demand remained healthy.
But for the city’s developers, commercial properties, hotels and luxury homes provide the fattest margins. Almost two-thirds of the offshore buyers of those properties come from mainland China. As the outbreak and unrest kept mainland investors away, commercial property sales fell to zero in the first quarter, the first time in over a decade. The remaining third — expats and foreign investors — now have dwindling incentives to invest.