By Clare Jim
HONG KONG (Reuters) - Mainland Chinese investors are scouring Hong Kong's commercial property market for bargains after prices plunged 30%, signalling a new wave of demand following anti-government protests last year that kept a lid on investment activity.
Property agents expect the influx of Chinese capital, which has helped Hong Kong become one of the world's most expensive property markets, can once again prop up the sector as China recovers from the COVID-19 pandemic and stands ready to deploy liquidity.
In August alone, mainland buyers snapped up at least two office towers and one hotel building worth HK$4 billion (386.74 million pounds)in total, according to agents and filings.
"A majority of recent large-value building deals were bought by Chinese investors; their number has really grown in the third quarter," said Reeves Yan, head of capital markets at CBRE Hong Kong.
"They're looking for bargains ... and they're confident in Hong Kong in the long term."
The pick-up in demand coincides with the imposition of a national security law in Hong Kong on June 30, which authorities in Beijing and the financial centre have said is necessary to ensure its stability and prosperity.
"We expect to see more mainland investors coming to buy land," said Dennis Cheng, senior sales director at Ricacorp (C.I.R.) Properties.
"If Hong Kong gets more stable in the next few months after the national security law, we expect more mainland companies to open branches here, and that will help the office sector to recover."
The move by Chinese investors is in stark contrast to foreign investors, who are staying away due to growing concerns over the city's future. Critics of the legislation say it has pushed the former British colony onto a more authoritarian path following months of sometimes violent democracy protests last year.
"Foreign investors are still absent. I spoke to two foreign funds recently who said they won't consider Hong Kong at the moment because the political risks are relatively high now," said Daniel Wong, CEO of Midland IC&I.
EARLY SIGNS
In July, state-owned China Mobile and a consortium led by Chinese major developer Vanke bought one land parcel each for HK$5.6 billion and HK$3.7 billion, respectively. They were the first mainland Chinese companies to win public tenders since January.
Colliers says it expected mainland capital will become "the next wave of demand" in the Hong Kong leasing and investment markets, supported by cross-border financial initiatives in stock and wealth management, and the city's large capital pool for fund-raising.