Hong Kong: Even violent unrest fails to dampen the city's property demand

On Saturday morning in Admiralty on the fringes of Hong Kong’s central business district, prospective home buyers crowded the sales center for One Eighty, brochures and checkbooks in hand.

Within a few hours, developer Three Tops (HK) Ltd had offloaded almost three-quarters of the 53 mainly one-bedroom units on offer, helping to push sales of new apartments over the weekend to the most since late August.

The demand -- even after months of anti-government protests that have tipped Hong Kong’s economy into recession -- is testimony to the strength of the city’s real estate sector. Embattled Chief Executive Carrie Lam last month announced plans to help first-time home buyers break into what is the world’s least-affordable property market -- a move some analysts say will only send prices higher.

“Demand for property is still very strong,” said Sammy Po, the chief executive officer of Midland Realty International Ltd.’s residential department. “Because of the social events, some people are saying they’ll emigrate. For those staying, they still have to buy a home.”

At least 200 people were arrested and more than 70 injured over the weekend as protesters blocked roads and vandalized public facilities. Just a five-minute drive from Admiralty, tensions ran high as thousands of black-clad demonstrators gathered in Victoria Park chanting anti-government slogans. Things escalated quickly with police firing tear gas on Saturday afternoon in nearby Causeway Bay and Central, both key commercial districts.

Citigroup Inc. analyst Ken Yeung said home prices that have faltered somewhat -- an indicator of secondary private residential apartments dropped for a 10th straight week last week -- will start rising again, spurred by Lam’s recent policy changes. Allowing purchasers to borrow up to 90% of a property’s value to a maximum of HK$8 million ($1 million), from HK$4 million previously, could unleash pent-up demand, he said.

Rising prices will come as bad news for Hong Kong’s younger generation, many of whom have been struggling to get on the property ladder. While Beijing’s encroachment on the city’s freedoms is at the heart of the protests, stratospheric home values are also fueling the anger.

“It’s too easy to exceed the income cap for public housing, and at the same time, young people can’t afford” to buy a private apartment, said Kay Lee, a 25-year-old medical worker who was dressed in black at a rally in Central on Saturday.

Lee said even if she could afford it, she wouldn’t buy an apartment in Hong Kong because of the city’s gloomy future.

“Some may consider owning a home in Hong Kong the most important thing rather than freedom,” she said. “It’s just a matter of personal preference.”