Tuesday, July 4, 2017

Chinese Money Has Changed the Face Of Hong Kong's Skyline

China’s Wealth & Power


Italian fashion house is said to be one of the several top firms in Western countries to have found themselves on the other side of shaky real estate boom in Hong Kong. In prime locations of the city, the price of commercial property seems to have almost doubled up since U.K. had handed it over to China two years back, being the most expensive across the globe. Since several changes have taken place in Hong Kong after the historic handover in 1997, China’s increasing wealth and power is said to be at the core of confusion.

 Chinese companies, level with cash seemed to have given way to trophy office space in central districts, motivating up prices. According to brokers and developers, firms like Burberry –BBRYF and Gucci have resorted to cheaper office location in distant areas. No comments have been provided by the two fashion brands.

 Inflow of firms from the Chinese mainland tends to reveal a wider move in the role of Hong Kong as a business hub. The head of research for Hong Kong, Denis Ma had commented at a property brokerage JLL that `at the time of the handover, Hong Kong was seen as a stepping stone for multinationals looking to tap in the China market’.

Government Policies Progressively Opened Mainland Firms


He further added that in a sense it is still true though we have seen over the last few years is that (mainland Chinese) firms had begun to take a same view of Hong Kong as a stepping stone to engage with the wider world.

According to real estate services firm CBRE, the growing supremacy of China Inc. over Hong Kong seems difficult to go unnoticed and there are presently around 1,123 Chinese companies in the territory which is almost thrice the number 20 years back. This tends to account for 64% of the stock market capitalization of the city, up from 16% in 1997.

The government policies have progressively opened up mainland firms for Hong. Chinese businesses have been encouraged by Beijing to grow abroad with large sums of money being flooded out of China since its economy tends to have dropped in recent years. The persistent rush of Chinese money has increased in the real estate market.

Hong Kong Ranks Least Affordable City


According to CBRE, landlord tend to collect $264 on an average per square foot each year by way of rent for prime office space in central Hong Kong, which is quite high than the West End of London - $146 or Midtown Manhattan in new York - $144.

Being a property holder in Hong Kong tends to be a lot difficult since prices have increased by 89% since 1997, according to CBRE. Hong Kong tends to rank as the least affordable city for seven years in succession, as per Demographia, a public policy firm. The mounting prices have compelled some of the multination companies to move to other areas of Hong Kong though few have been quitting the region completely.

The numbers have actually doubled more over the past two decades from 3,069 to 6,863 according to CBRE. The president of the American Chamber of commerce in Hong Kong, Tara Joseph, considered the fall as comparatively small and put it down to the cost of rent and a recession in some industries, especially retail.

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