Despite worries over a looming asset bubble, the Hong Kong government will not likely impose further measures to curb the property market in the near-term.
Justin Chiu Kwok-hung, Executive Director at Cheung Kong (Holdings) said the remarks by Financial Secretary John Tsang Chun-wah that cautioned of a possible bubble “was a kind reminder to home buyers, on the potential risks from the European debt crisis.”
Tsang noted in a recent blog post that the property market will not be spared from Europe’s debt crisis, although loose monetary policies in developed countries could encourage more property purchases.
Chiu added that many buyers consider property an asset.
“Mortgage rates are around two percent now, compared to inflation of about five percent. Many home buyers are buying properties to offset inflationary pressures,” he noted.
Chiu also said that comparing the present property market to that of 1997 or 2000 is misleading, noting the huge difference in macroeconomic environments.
“One difference would be the home buyer groups. Back then, there were hardly any mainlanders buying homes. But now we have to take into account their purchasing power too.”
This year, Cheung Kong has already sold 1,300 units for a total of HK$10 billion (S$1.61 billion). For commercial properties under the Fortune REIT, Chiu hinted at selective rental increases.
Although businesses like Chinese medicine shops, cram schools and hairdressers “may not able to afford high rents,” Chiu still wants their presence, “because they have the personal network in the neighbourhood.”
Meanwhile, rental rates will be increased for businesses like banks, real estate agencies and fast food outlets.