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Sunday, October 21, 2007

Hong Kong's never had it so good

By New Straits Times

A decade has passed since the rock that is Hong Kong was formally handed back to China by Britain. And how it's prospered since then.

According to the world's largest real estate services firm CB Richard Ellis (CBRE), there's no where for HK's real estate sector to go but up, thanks mainly to investments from the mainland that are fuelled by "encouraging market conditions".

CBRE Hong Kong managing director Rick Santos said in the company's property market review covering the first half of 2007, the latest wealth management opportunities introduced by the mainland's Qualified Domestic Institutional Investors (QDII) scheme have caused funds to step up their pursuit of equities in the HK stock market, which in turn has created an explosive effect on investment activities.

With high liquidity in the perceived promise of monetary returns, he said many funds have actively expanded their property portfolios.

"The finite supply of premium properties is also attracting substantial interest from buyers who had previously adopted a wait-and-see approach," he pointed out, adding that "the buoyant demand and relatively limited supply of top quality properties will continue to maintain property prices at a relatively high level".

On top of that, Santos said mounting inflationary pressure amid a weak US dollar and renminbi appreciation has made real estate an attractive investment alternative as it will push prices to new levels in the foreseeable future.

These are among the most recent stimuli influencing a region that has for over a century been seen as a world-class investment destination because of its strategic location, well-developed infrastructure and services, free flow of information and low, simple tax system.

As an international financial and business hub, dozens of companies have adopted HK as their base for Asia Pacific operations, causing a huge influx of foreign investment.

This will only get better in the future with China's accession to the World Trade Organisation and the signing and phased implementation of the Closer Economic Partnership Arrangement (Cepa), which is HK's new trade arrangement with China.

On HK's investment market in the first half of 2007, Santos said 96 transactions were registered across all property sectors, worth over HK$27.5 billion (RM12.51 billion).

Of this, local investors accounted for 70.8 per cent while foreigners made up the rest.

CBRE said the residential sector made up 32.9 per cent of the transactions and the office sector, 26.6 per cent.

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