Homes in Huizhou cost a fraction of those in Hong Kong despite being not much more than 60 miles away. But property price arbitrage in the GBA isn’t as straightforward as speculators might hope.
Everybody knows that homeownership in Hong Kong is punishingly expensive. So why wouldn’t the locals buy further afield in a bid to skirt the sky-high prices?
The opportunity seemed obvious enough in the South China Morning Post this week, with news that Rmb1 million (about $150,000) will get you a reasonably spacious 90-square metre home in Huizhou, according to property broker Centaline.
The same amount in Hong Kong allows for just 6.6 square metres of living space – not much more than an outsized rabbit hutch.
The two cities are about 60 miles apart and travel time is about 80 minutes high-speed rail. That doesn’t sound like much for many of the world’s commuters, but it would probably put off most Hongkongers. However, speculators might still sniff around in one of the GBA’s eastern outposts, where cheaper land is keeping property prices at more affordable levels.
Huizhou has another attraction that is rarely available elsewhere in the region – none of the eligibility restrictions that make it harder for outsiders to purchase property.
At the moment seven of the nine mainland cities in the GBA don’t allow Hongkongers to buy homes unless they have a local residency card (Zhaoqing in the far west is the other outlier). Prospective homeowners have to pay into local social security funds to get the right to buy. Six months of contributions make a purchase possible in a smaller city like Zhongshan, the SCMP’s Zheng Yangpeng reports, but it can take up to five years to get the green light in cities like Shenzhen or Guangzhou.
A real estate firm in Zhuhai – a hotspot for Hong Kong buyers since the opening of the world’s longest sea bridge between the two cities last year – told the Brief this week that developers are finding creative ways around some of the restrictions, which stem from efforts to curtail runaway prices two years ago. Social security contributions can be paid in lump sums, for instance. Other developers classify their projects as commercial property in a way that allows buyers to dodge some of the curbs on residential sales.
But there are still limits on the number of properties that can be purchased – and moratoriums on reselling them – that will make potential homeowners hesitate across the GBA. In Huizhou the restrictions are a little less onerous, Zheng notes. But buyers will still be cautious about trying their luck in a market where demand doesn’t look as dependable as tech-savvy Shenzhen or politically connected Guangzhou.