Hong Kong Property Market Still Forecasted As Strong
Recent news reports say that the property boom Hong Kong experienced in 2010 is cooling off. However, this news is balanced by an expected projection of a 4% increase in gross domestic product (GDP) for the years 2011-2014. While some property investors might be looking at lower profit margins because of the cooling off, many have already positioned themselves wisely for the future in Hong Kong. For the forward-looking property investor, Hong Kong can be a very stable choice even in the midst of a slight economic slowdown.
Why Hong Kong is Popular for Property Investment
Hong Kong, for many years, has been one of the busiest cities on the planet. However, for many of those years, Hong Kong and Mainland China were at odds with each other. That was, until they decided it would be of mutual benefit to combine resources and develop a joint economic strategy. This combined effort has paid off well for Hong Kong as today it is considered the financial and business hub of Asia. This, along with a favorable tax system and attractive leasehold options on land, draws international businesses from all over the world. Furthermore, international business also brings in expatriates thus creating a healthy demand for residential housing.
The Strongest Property Markets in Hong Kong
Demand for both residential and commercial property continues to be strong in Hong Kong. However, actions have been taken to cool the residential property market thus influencing investors to shift to commercial property investments. Yet there are still attractive opportunities in the luxury residential property market although profit margins might be lower than those enjoyed in the past.
One problem in Hong Kong is the shortage of flat land due to the close proximity of the seashore to the mountains. This means that most residential units are built vertically rather than horizontally and rental rates are higher. While you can live in some beautiful residential units with spectacular ocean views, they tend to be smaller with a minimum of outdoor space. This demand and shortage of space tends to create significantly more expensive residential real estate than in other parts of Asia.
Because many foreign businesses choose Hong Kong to be the hub of their Asian operations, the office property market is another popular area for investment. There is no doubt the business sector is growing and along with that growth comes the requirement for construction projects to upgrade infrastructure in order to sustain the influx of workers that will occupy new office space.
Of course as the business sector in Hong Kong continues to grow, an increase in demand for retail space is expected to follow. This is due largely in part to steady employment and increased wages enjoyed by those working here. These two factors create more consumer power thus creating demand for retail property development.
Other Factors that Make Hong Kong Attractive
Hong Kong has some of the most modern and efficient infrastructure in the world which is an additional factor making it attractive for property investment as well as international business. It has efficient railways that connect to the Chinese mainland as well as commuter rail systems for inside the city and to connect the New Territories to the northeast and northwest. The ports of Hong Kong are serviced by efficient sea transportation systems which makes it attractive for import/export businesses. Tourism is on the increase here as well.
All land in Hong Kong falls under the statutes of what is known as the Conveyancing and Property Ordinance (CPO). The CPO is overseen by the government and allows individuals and business entities to obtain leaseholds on land for up to 999 years. However, Hong Kong has very few restrictions on foreign property ownership with regard to structure. Favorable taxes, relaxed property ownership restrictions, and a general attitude that welcomes foreign business makes this city a premier location for practically any type of property investment.