Chinese investors cut and run from HK property

[The Smoking Man]

Chinese investors cut and run from HK property

Mainland investors are bailing out on properties purchased at peak prices in Hong Kong due to problems financing the deals, the South China Morning Post reported. Only last year mainland buyers - many of them speculators from Shenzhen, Shanghai and Wenzhou - were being given tours around new projects by Hong Kong developers. With China's stock and real estate markets now struggling, these investors have seen their wealth evaporate to the point that they are no longer able to meet payment obligations on their new properties. Fredy Wu Yat-fat, CEO of estate agency Hong Kong Property, said some mainlanders had either forfeited their uncompleted purchases or sold the assets at a loss in the secondary market. Housing prices in Hong Kong's mass market have fallen 5-10% so far this year and analysts expect a further 20% decline.

[Polly]

Many of them have to forfeit their down payment or sell at a loss because they could not pass the stringent mortgage requirement in HK with regard to their income and assets.  Their applications are either turned down outright or they have to secure a mortgage at exhorbitant interest rates.

Employment and growth are still strong in the territory with really good property still fetching respectable prices.  Owners are not keen to sell either because of the low interest rate (~2.75%), strong rental income and very low supply of new property.

I should think in the absence of investment bankers screaming the sky is falling down so as to repatriate funds back to the US to doll up the books for the imminent election in November, the local property market should be slow but definitely not collapsing.

[The Smoking Man]

Huh???


You put down a down payment before you secure a mortgage???

You must have some strange practices there in Hong Kong.

How aboutthe fact that Hong Kong Banks had a lot of money wrapped up in Europe and the USA???

You seem to think that all markets work in isolation.

[Polly]

Huh???


You put down a down payment before you secure a mortgage???

You must have some strange practices there in Hong Kong.

How aboutthe fact that Hong Kong Banks had a lot of money wrapped up in Europe and the USA???

You seem to think that all markets work in isolation.

The safest way is of course do it as you say, check with the bank first about how much you are likely to get for a mortgage.  But local people have a rough idea and many if not most go ahead with the property deal first.

The Mainlanders in this case were either very confident as well thinking they should qualify for a loan, or they were looking to resell the flat during the long (10 months?) completion period.  However as no local banks will offer them a loan and they could not resell, their deals fell through.