The new year is promising to be a brighter place for property investors looking for opportunities outside Hong Kong, as industry consultants favour several tried-and-tested locations in Europe and Southeast Asia.
With no end in sight to the city’s political impasse, real-estate investments in Portugal, Greece and Ireland have become popular bets in 2019 for wealthy local residents seeking to escape from the troubling state of affairs.
Other hotspots, such as New York, London and Singapore, are expected to retain their appeals in 2020, they said, as a recession at home diminishes the prospects for capital gains in the near term, they said.
An index tracking Hong Kong’s secondary home prices have slipped since reaching a record in May, according to government data. Six months of anti-government protests have failed to break the impasse over the city’s political future while a recession takes hold, with industry analysts forecasting the first drop in prices since 2008 next year.
The anaemic outlook means it may be worthwhile looking outside Hong Kong for better gains, they added.
“We recommend investors to search for markets with sound demand and supply fundamentals which can outweigh short-term political or regulatory risks,” said David Ji, head of research and consultancy for Greater China at Knight Frank.
London’s commercial property sector is being held up as a prime choice for companies, especially after the results of recent UK elections have provided a clearer outcome to the Brexit debates, said Paul Hart, Head of Commercial at Knight Frank.
“Companies will restore their expansion plan which will boost demand for commercial property,” he said. “London not only presents long-term stability, but the investment yield is also among the highest in major financial hubs, particularly when compared with other European capitals.”
Commercial properties in central London will outpace other cities such as Milan, Paris, Berlin and Hong Kong in terms of investment yield, growing about 4.5% in 2020, Knight Frank estimates. That is likely to appeal to buyers from Hong Kong, it added.
In the residential market, Knight Frank’s top picks are Paris and Berlin for the wealthy.
Paris’s luxury home market is likely to outperform the rest of the pack in Europe next year with an estimated 7% gain, helped by low-interest rates, tight supply and strong tenant and second-home demand. Berlin is forecast to gain 5%, it said.
Greece is likely to continue to lure Hongkongers based on its popularity, said Georg Chmiel, executive chairman at property portal Juwai.com. Its golden visa and citizenship programmes should appeal to city folks.
Its US$270,000 (HK$2.1 million) entry cost via a property investment plan is seen as a passport to fast-track Europe-wide residency and access to the Schengen Area, where 26 European states have officially abolished border control to ease travel.
Maggie Hu, an assistant professor of real estate and finance at the Chinese University of Hong Kong, said opportunities are emerging in the US and Vietnam.
New York is among the most sought-after locations by the super-rich based on transactions over the past five years based on data compiled by Knight Frank. Demand from mainland Chinese has increased by 15% to 20% since the summer, according to Christie’s International Real Estate agents.
In Vietnam, high-rise flats have been snapped up by foreigners in upscale districts in Ho Chi Minh City. There, high-end flats cost about half the price in Bangkok, and less than a tenth of those in Hong Kong, according to REA Group, a global online property advertising group.
“We expect markets in Southeast Asia will continue to attract property buyers’ interest,” said Kenneth Kent, general manager in Hong Kong at REA Group. The region’s “high yield potential and geographical proximity” are its plus points, he added.
Singapore and Thailand rank high with Japan on the list because of stability and desirability, said Zackary Wright, executive director at Christie’s. The city remains an attraction for investors despite the government’s efforts to make it pricier for foreigners so as to cool an overheating market, Juwai.com’s Chmiel said.