The mass student protests in Hong Kong are disrupting the city and could hit the property market, commentators fear
Mass student protests in Hong Kong could bring about a fall in the property market, it is feared.
The major unrest created by members of the Occupy movement who are calling for more democratic change has seen the values of developers on the stock market fall and has led to commentators predict that the real estate sector will suffer.
Tens of thousands of pro-democracy protesters are blocking Hong Kong’s streets, shutting down its business hub and ignoring appeals to leave, the BBC reports. There are some claims that they are angry at Hong Kong’s high property prices.
The city remains heavily disrupted, with several major thoroughfares blocked and protests have spread to other areas.
The protestors are demanding more say in the direct elections that are scheduled for 2017 and do not want the Chinese government to choose the candidates.
Property prices in Hong Kong in the first half of the year grew 3.7%, according to global agent, Savills, 15% lower than the same time in 2013 and, along with government market cooling measures, some commentators say the market is set to fall.
Prime prices in Hong Kong, at just over US$4,000per square foot, are four times those of Dubai and more than twice those of Singapore, says Savills.
High property values contribute to Hong Kong being the second most expensive city in the world, behind London, for workers to live and for companies to place staff, says Savills. It previously topped the ranking for the past five years. A combination of falling residential rents and, most importantly, a weakening currency, has increased cost competitiveness in the city.
Residential property prices in Hong Kong are 40% higher than in London, although the gap is starting to narrow.
Property services firm CBRE says the event provides a reminder that commercial real estate investors should diversify.
Out of 14 million square feet of office space in Hong Kong’s Central and Admiralty districts, about 60% is leased to multinational companies. “The incidence, however, highlights the importance of having split offices and is set to promote office premises in decentralized locations,” says a brief investor note from the firm’s head of research, Marcos Chan.
Hong Kong’s Chief Executive, Leung Chun-ying, is a private businessman and former real estate executive with long-standing ties to Beijing. He has appealed to protesters to withdraw for the sake of Hong Kong’s image and stability.
Last year, thousands of Hong Kong’s estate agents took to the streets to protest against property cooling measures and urges the government to change course.
JLL’s Senior Manager of Marketing at the time, Ivan Ng, told OPP Connect, “We believe that the Government policies introduced will increase the costs and risk premium for investing in Hong Kong, and will eventually turn off investors.”
The picture from the current protests is from the Voafanti website.
Overseas property agents – are the protests affecting your business either from Hong Kong residents investing overseas or those wanting to buy in Hong Kong? Email [email protected] and let us know.
By Adrian Bishop, Editor, OPP Connect