Hong Kong is poised to surpass New York City as the most popular location for mainland Chinese investors in 2017, with total transactions more than doubling in the first quarter of the year, according to a report published Wednesday by Colliers International.
Chinese enterprises and individuals poured HK$36.1 billion (about US$4.6 billion) into Hong Kong’s real estate market, a record high that represents a 213% increase from a year ago.
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Chinese investment in Hong Kong spreads across different property types, including residential, office and industrial markets. In the luxury residential segment, mainland Chinese buyers account for 10% to 15%, according to Colliers International.
The growth momentum was carried forward since late 2015, when Chinese companies struck several major investment deals. In 2016, property investment by mainlanders increased 60% to HK$41.3 billion (about US$5.3 billion) compared to the prior year.
The report did not provide first quarter for other cities but still, with the Hong Kong numbers, Colliers is predicting that the city will surpass New York in terms of real estate investment this year.
New York City was the top destination for Chinese real estate investment last year, with a total investment of HK$44.4 billion (US$5.7 billion), according to Real Capital Analytics data cited by Colliers International, a global real estate service company.
Other major global destinations for Chinese real estate investment in 2016 were Sydney, London, Melbourne, Vancouver and Toronto, in the order of total investment.
A few factors draw mainland Chinese investors to Hong Kong, including geographical proximity, a stable legal and political environment and potential for property price growth. Overall residential prices and office prices have surged 26% and 11%, respectively, over the past three years, according to the report.
In addition, currency factor also comes into play. "Concerns about potential continued renminbi [yuan] depreciation has been an important factor behind Chinese foreign investment in general, and investment in Hong Kong has represented a simple way to hedge against this risk," Zac Tang, senior analyst at Colliers International, said in the report.
The Hong Kong dollar is pegged to the U.S. dollar.