Hot Property Gateway To China

In the budget, the Financial Secretary stated that Hong Kong

is experiencing a continued upturn in the economy and demand

for residential and commercial properties has increased,

exerting upward pressure on both property pricesand rent. There

are clear reasons behind the heat of the Hong Kong property

market.

The budget announced the lowering of the property tax rate

by one percentage point to 15% and a one-off 100% waiver of

rates for 2008/09, as well as the stamp duty on property

transfers, which has remained HK$100 for properties priced

under HK$2,000,000 and a maximum of 3.75% on properties priced

over HK$6,000,000.

Hong Kong's position as the gateway to China is likely

to bring significant economic growth in the future with every

indication that this should positively impact on the property

market. Major transport infrastructure projects are progressing

well, in particular the governments of Guangzhou, Hong Kong and

Macao are pushing ahead with preparations for the Hong

Kong-Zhuhai-Macao Bridge.

The Hong Kong Government is also concerned about the

redevelopment of old urban areas which can release land for

better use. As such, bulk acquisitions of existing properties,

with a view to either investment or redevelopment, remain an

attractive option among developers.

According to research conducted by one of the top real

estate market analysts, the demand for residential properties

boomed rapidly, with the number of residential sale and

purchase agreements for 2007 reaching their highest annual

sales figures since 1997. The leasing market for luxury

properties remained strong through the fourth quarter of 2007

with demand coming from the ongoing expansion of the banking

and finance sector.

On the supply side, there were only 2 residential

development sites under the 2007/08 Application List sold

during the year 2007. With strong demand and declining stock,

capital values were pushed higher by the end of 2007 and will

even reach a pinnacle in 2008. The rental market will continue

to...