Hong Kong’s Upward Bound Real Estate
This was originally published on Feb 10, 2013 on Realestateexpedition.com
Hong Kong is the third most expensive place to buy an apartment, according to a recent report published by Global Property Guide shows. Monaco and London are the most expensive cities on earth for apartments, just before Hong Kong.
An average 600 square feet apartment is expected to cost somewhere between $500,000 to $600,000 USD. However, this high price is not a surprise as Hong Kong has been doubling its property prices in the past four years. In 2012, property prices have increased 20 percent. Hong Kong has one of the most open economies in the world and its property market is investors’ favourite due to easy and straightforward real estate transaction procedures.
Author/Copyright: Ahmed Dawn www.adawnjournal.com
Investors from around the globe, mainly from the U.S. and European countries, are flocking to Hong Kong to chase growth. Hong Kong recently implemented measures to curb its overheated property market. Some of the measures taken were to implement a 15 percent tax for foreign and corporate buyers and the extension of a special duty tax on frequent transactions, along with increasing the supply of apartments. However, these measures were proved to be insufficient to curb property prices. Sales volumes have declined, but no significant price correction has come into effect. Hong Kong’s low rate mortgage supports high property prices in the city. Hong Kong’s lending rate is tied to U. S. low interest rates to maintain currency peg to the U.S. dollar.
As long as the U.S. and developed countries keep their interest rates at a record low and go through quantitative easing, investors will be pouring their capitals in Asia to pursue growth. With capitals flocking in from foreign countries and from local buyers due to low local lending rates, the Hong Kong real estate boom may not bust that soon – as least until 2015, as the US Fed is expected to raise rates gradually starting then.