As a property investor, it’s always a good idea to keep your finger on the international property pulse.
A recent article in the Australian Financial Review reiterated just how property dominates in any part of the world as the investment of choice, with the potential for phenomenal returns.
The article highlighted the explosion of property prices in one of the world’s most expensive real estate markets – Hong Kong. Right now, mainland Chinese companies are piling into Hong Kong, pushing the prices of property through the roof. The buying frenzy comes at a time when home prices in Hong Kong have reached new record highs even as the government tries to cool things down.
Property is the currency of this thriving city and the population is scrambling to find space. According to this report, nearly 200,000 Hong Kong residents have resorted to living in wire cages, half of a bunk bed, or partitioned apartments, often smaller than car park spaces.
Hong Kong’s average price per square foot for luxury property, at US$3,000, is ranked second most expensive in the world, just after Monaco, according to Christie’s International Real Estate. By comparison, London is the third most expensive at $US1,930 while New York is $US$1,860 with no signs of slowing down anytime soon.
This will trickle down to the Australian property market too, with more and more Chinese investors looking for affordable options. As more international investors eye off our thriving market, we’ll see more competition for property here, which is ultimately good news for savvy local investors.
The upshot in Hong Kong is that only the large property developers can now afford to tap into this market. According to Thomas Lam, senior property director at Knight Frank, the arrival of any new players from mainland China will make it ever harder for mid and small sized local property developers to acquire new land. Read this article here.
He says “The rules of the games have changed.” I couldn’t agree more.