Curbs on buying property in Hong Kong have cooled a market pushed sky-high by Chinese investors.
However, the steps have sparked a craze for an unlikely new investment — the car parking space.
The Asian financial hub slapped new taxes on residential properties in late October to rein in prices, amid growing complaints from Hong Kongers that buying even a tiny apartment was now out of their reach.
Chinese buyers were largely blamed for the increase in prices, which have skyrocketed 90 percent since 2009, as they flocked to the territory with their new wealth amid the country’s economic boom.
Hong Kong Chief Executive Leung Chun-ying (梁振英) hoped the curbs would calm anger over the issue in the space-starved southern territory of 7 million, after previous promises to make more land available did little to help the situation.
The curbs appear to be working, but have also had unusual side-effects, with the territory’s imaginative investors now focusing on car parking spaces, prices of which analysts say could hit an all-time high.
The issue grabbed the public’s attention with a single sale of parking spaces for HK$1.3 million (US$166,600) last month, according to reports.
It was the most expensive sale when tycoon Li Ka-shing’s (李嘉誠) flagship Cheung Kong Holdings (長江實業) offloaded 514 car park slots for a total of HK$600 million.
Some of the slots, located in the New Territories area of Hong Kong bordering China, were reportedly quickly resold for profits of up to HK$300,000 each.
Those who sell the spaces said they had seen a surge in activity, which they believed was because the slots are not affected by the new taxes, as well as being maintenance-free and relatively cheaper than buying houses.
They say car parking spaces were not previously a popular investment in a territory which only has about half a million private cars and is well-connected by a vast public transport system.
“Parking was a very unattractive investment in the past. It’s not easy to get rid of it so it’s not a very tradeable product,” said Josh Wong, who runs online car park trading Web site parkinghk.com.
High property prices is just one source of rising tensions between natives of the territory and the Chinese who are arriving in increasing numbers.
The curbs — a 15 percent stamp duty on non-permanent residents and corporate buyers as well as a higher stamp duty on the resale of property within three years — appear to have cooled the property market in general.
New home sales have fallen nearly 50 percent since they were introduced and prices are also edging down, albeit slowly, estate agents say.
“Definitely it has had quite a significant impact on the transaction volume,” said analyst Buggle Lau (劉嘉輝) from Midland Realty (美聯物業).
There were only 1,054 sales of first-hand residential properties in the month to Nov. 29, down 49 percent from the same period in October, according to a Midland survey that used official land registry figures.
Prices had fallen, but by an average of less than 1 percent, Lau said.
In Taikoo Shing, an area near the territory’s center that is popular with Japanese expatriates, the average per-square-foot price has dropped 2 percent to HK$10,920, according to estate agent Centaline (中原地產).
The fall has made savvy investors turn to car parking spaces, but Centaline research head Wong Leung-sing (黃良昇) warned that it was a risky investment.
“Once the economy slows, the first thing people do is to sell their cars, not their house,” he said.