From luxury Singapore apartments to Malaysian seafront condos, Hong Kong investors are shifting cash into Southeast Asian property, demoralized by pro-democracy protests in the territory and US-China trade issues.
Property stocks in one of the world’s most expensive housing markets have plummeted since June, with developers being forced to offer discounts on new projects and cutting office rent.
Hong Kong businessman Peter Ng bought a condominium on the Malaysian island of Penang — which has a substantial ethnic Chinese population and is popular among Hong Kongers — after the protests began.
“The instability was a catalyst for me,” the 48-year-old stock market and property investor told reporters, adding that he was worried about long-term damage to the Hong Kong economy if the unrest persists.
“Investors will always look at things like that, political stability,” he said.
Derek Lee, a Hong Kong businessman who owns an apartment in Penang, said that he knew others in the Chinese territory who were considering investing in Southeast Asian property because of the unrest.
“People are thinking about how to quicken their ideas, how to make a more stable life,” the 55-year-old told reporters.
Adding to the allure of Malaysia is its relative affordability and prices much lower than Hong Kong.
The Malaysia site of Southeast Asian real-estate platform Property Guru has seen a 35 percent increase in visits from Hong Kong, Property Guru chief executive officer Hari Krishnan said.
While Hong Kong’s protests are primarily pushing for greater democratic freedoms and police accountability, they have been fueled by years of simmering anger toward Beijing and the Hong Kong government over falling living standards and the high costs of living.
Hong Kong’s property market is one of least affordable in the world, with sky-high prices fueled, in part, by wealthy mainlanders snapping up investments in a city that has for years failed to build enough homes to meet demand.
However, mainland Chinese, who traditionally viewed property in Hong Kong as a safe investment, are now opting for rival financial hub Singapore as a result of the protests and the US-China trade dispute, according to observers.
There has been a jump this year in sales of luxury apartments in the city-state — which like Hong Kong is known for pricey property — driven partially by mainland Chinese buyers, consultancy OrangeTee & Tie said.
“The protests in Hong Kong have made some of the [mainland Chinese] based there ... [more concerned] about investing in Hong Kong real estate, so they carry that investment to Singapore,” said Alan Cheong (張國榮), executive director of the research and consultancy team at Savills Singapore Pte Ltd.
As well as hitting China’s economy, trade tensions might have discouraged some Chinese from investing in the West and pushed them toward Singapore, with its mostly ethnic Chinese population.
“I think they don’t want to go to the West,” Cheong said.
Singapore is “the closest country culturally to China other than Hong Kong, and I think they feel more comfortable with that,” he said.
There are further signs the stable, tightly ruled city is benefiting from the Hong Kong turmoil — Goldman Sachs Group Inc last week estimated that as much as US$4 billion flowed out of Hong Kong to Singapore this summer.
Analysts warned that there was little hope of Hong Kong’s property market recovering soon.
“Hong Kong property share prices have corrected by about 15 to 25 percent since July,” said Raymond Cheng (鄭懷武), head of Hong Kong and China property at CGS-CIMB Securities International Pte Ltd (銀河-聯昌證券).
Residential sales were still holding up, but only when developers offered discounts, office rents were expected to fall by as much as 5 percent and shop rents were also badly affected, he said.
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