With all the cities in the world from which to choose, why is Hong Kong so popular?
It has to do with the rule of buying what you know: Hong Kong is the most popular destination for Chinese tourists – it’s nearby and it’s a city where many speak Mandarin. What’s more, the rising yuan goes a long way in Hong Kong, a special administrative region that remains nominally under Chinese rule but whose currency is pegged to the U.S. dollar.
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China’s rich are snapping up properties all around the world, according to a feature in today’s WSJ.
With all the cities in the world from which to choose, why is Hong Kong so popular?
It has to do with the rule of buying what you know: Hong Kong is the most popular destination for Chinese tourists – it’s nearby and it’s a city where many speak Mandarin. What’s more, the rising yuan goes a long way in Hong Kong, a special administrative region that remains nominally under Chinese rule but whose currency is pegged to the U.S. dollar.
Samson Law, managing director of Sotheby’s real-estate division, adds that China’s recent measures to cool its property market—including limits on multiple-home ownership and higher interest rates—have prompted wealthy Chinese investors look outside the country.
“What’s the next step after China? Hong Kong,” he says. “Then later, they’ll look to buy overseas, in London, New York or in Australia.”
The surging demand from China, especially for luxury properties, has prompted the high-end real-estate divisions of Sotheby’s and Christie’s to set up Hong Kong offices. These buyers aren’t buying just any homes —they’re buying the most expensive in town.
After keeping its currency tightly linked to the US dollar for years, China in July 2005 revalued its currency by 2 % against the US dollar and moved to an exchange rate system that references a basket of currencies.
The government vowed to continue reforming the economy and emphasized the need to increase domestic consumption in order to make China less dependent on foreign exports for GDP growth in the future.
The country’s per capita income was at $6,567 (IMF, 98th) in 2009.
The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978.
Its mineral resources are probably among the richest in the world but are only partially developed.
A report by UBS in 2009 concluded that China has experienced total factor productivity growth of 4 per cent per year since 1990, one of the fastest improvements in world economic history.
China’s increasing integration with the international economy and its growing efforts to use market forces to govern the domestic allocation of goods have exacerbated this problem.
On top of this, foreign direct investment (FDI) this year was set to “surpass $100 billion”, compared to $90 billion last year, ministry officials predicted.
China’s ODI growth witnessed strong momentum this year.
China is aiming to be the world’s largest new energy vehicle market by 2020 with 5 million cars.
In large part as a result of economic liberalization policies, the GDP quadrupled between 1978 and 1998, and foreign investment soared during the 1990s.
Despite initial gains in farmers’ incomes in the early 1980s, taxes and fees have increasingly made farming an unprofitable occupation, and because the state owns all land farmers have at times been easily evicted when croplands are sought by developers.
China is the world’s largest producer of rice and wheat and a major producer of sweet potatoes, sorghum, millet, barley, peanuts, corn, soybeans, and potatoes.
Fish and pork supply most of the animal protein in the Chinese diet.
Offshore exploration has become important to meeting domestic needs; massive deposits off the coasts are believed to exceed all the world’s known oil reserves.
There are also deposits of vanadium, magnetite, copper, fluorite, nickel, asbestos, phosphate rock, pyrite, and sulfur.
China’s exploitation of its high-sulfur coal resources has resulted in massive pollution.
Most of China’s large cities, like Shanghai, Tianjin, and Guangzhou, are also the country’s main ports.
Read more:
Why Chinese Buyers Want Hong Kong Homes
