Property developers rush to attract HK residents amid uncertainty over new law

14-Jul-2020 Intellasia | CNBC | 6:02 AM Print This Post

Real estate investment firms around the world are increasingly targeting Hong Kong investors through social media ads and events.

Last year, the Chinese territory entered its first recession in years initially triggered by months of pro-democracy unrest and the impact of the US-China trade war, then exacerbated by the coronavirus outbreak which forced the city to shut its borders.

Most recently, a new national security law which is said to be aimed at restoring order, is creating anxiety among some. Some Hong Kong residents have also expressed concerns that freedoms like an open internet could be slowly stripped away.

For instance, demand in Hong Kong for virtual private networks surged shortly after Beijing introduced the law. Meanwhile, social media app, Tik Tok quickly left the Hong Kong market citing “recent events” and Facebook said it has stopped processing government requests in the city.

Hong Kong’s Chief Executive Carrie Lam has said the new law will only target an “extremely small minority” of offenders, and maintains that the basic rights and freedoms enjoyed by the majority of its citizens will be protected.

According to Hong Kong’s statistics and census department, some 29,200 residents left Hong Kong last year amid months of social unrest. It was the highest number of departures since 2012, according to Caixin Global and Bloomberg.

Emigration ads on social media

In the past month, ads promoting emigration and international real estate investments have flooded Hong Kong users’ social media platforms, like Facebook, Instagram and YouTube.

The ads, seen by CNBC, boast slogans like: “Now is the time to consider UK real estate,” “Attend our free webinar on path to United States green card for Hong Kong residents” and “Create a new life in Australia or New Zealand.”

The biggest interest is in the UK where some ads even reference recent announcements in which the UK said it would grant up to 3 million people in Hong Kong a path to citizenship, through a British National (Overseas) passport (BNO). The document was offered to select Hong Kong citizens before the territory was handed over to China in 1997 and currently offers passport holders access to British consular assistance and the right to stay in the UK for six months.

China has called the UK announcement “a gross interference in China’s internal affairs.”

Mohamad Nasir, a UK-based investment consultant at NPP Investments, said there’s been a spike in the number of inquiries from Hong Kong about its properties in Manchester. “We’ve probably seen a 200 percent increase in the past week alone,” he said.

While he usually works with Hong Kong clients who are primarily seeking investment properties, Nasir said he’s now getting less inquiries about rental income and receiving more questions about lifestyle and immigration.

“They’re saying, ‘I’m looking to invest, but also I’m potentially looking to move over as well within the next six months to 12 months,’” he added.

His firm is just one of many seeing a surge in demand from a widening demographic of Hong Kongers.

“A lot of the wealthy, wealthy Hong Kongers already have a footprint in the UK and they’ve already started some of that displacement of capital or diversification of capital outside of Hong Kong,” said James Dempsey, Asia sales director at BuyAssociation, an investment consultancy specialising in the UK market.

The firm sells properties in key cities in the UK and said it’s experiencing one of the biggest spikes the business has seen.

“The BNO passport status has really influenced the general public,” Dempsey said. “The biggest fuel at the moment is your everyday person in Hong Kong and that’s why we’re seeing such an increase in inquiries and transactions.”

The increasing interest from global developers is not just coming from the UK The DLF Camellias Gurgaon, a luxury real estate project in New Delhi, has shifted much of its attention from the US and UK to focus on Hong Kong buyers.

“There is a heightened interest now, triggered in a market like Hong Kong by the political slight instability, or anxiety in which kind of overlays the Covid anxiety,” Karan Kumar, chief marketing officer at DLF Limited said. “It’s only more appropriate for us to reach out to that market more directly.”

From the US to the UK

Hong Kong investors purchasing investment properties overseas isn’t new.

Kingston Lai, who founded Asia Bankers Club in the city in 2012, wanted his company to be a place that offers alternative investments services, mainly through investing in real estate abroad. At a recent event in Hong Kong, he spoke to crowds first in English, then in Cantonese to educate attendees on both lifestyle and investment options for a new Manchester development.

“When they see the UK property market still at a very good level, the sterling is cheap, they want to plan ahead,” he told CNBC. “It’s planning ahead for their kids’ education, maybe for themselves at some point.”

Before the protests broke out in Hong Kong last year, CNBC attended an event hosted by the firm which sold units to a yet-to-be-opened Manhattan skyscraper.

But that was last year. The situation appears to have changed since.

“The interest in the US was growing, but now with what’s happening in the US, people do worry about the pandemic and election, creating a lot of uncertainty for the investors,” Lai said. “Certainly, (the) US dollar is still a very key currency… but for them to think about potential growth in terms of the real estate market, they see a bigger potential in the UK market.”

Aside from the UK, other developers targeting Hong Kong buyers heavily include Canada, Australia and New Zealand.

“At the moment, the majority of Hong Kong nationals are most excited, or most enthusiastic, about the Canadian programme and what’s going on with the UK,” said Brennan Sim, senior vice president of EB5 United, a firm that specialises in providing immigration services to the US

Meanwhile, Lai estimated a surge of between eight to 10 times in inquiries for British properties in recent months.

“We know (the) Bank of England is printing money, quantitative easing is happening,” he said. “During the crisis in 2008, this is on a bigger scale, they worry about that, worry about money becoming worthless, they’re investing quickly into real estate. UK becomes a very good market for it.”

BuyAssociation’s Dempsey said Hong Kong buyers also attracted to the UK due to its education system and transparency with land registry, among other factors.

“Right now is going to be the biggest displacement of capital out of Hong Kong since ’97,” he predicted. “People are going to gravitate to the markets they feel are most secure.”


Category: Hong Kong

Print This Post