2014-03-20

Hong Kong Price Cut Wave Arrives, Banks Prepare; HKers Back to Protesting Mainland Visitors

香港楼市新盘降价潮袭来 龙头地产商集中出货 (Hong Kong New Building Price Cut Wave Arrives)

Hong Kong Real Estate Sells for $2 million per Square Meter
The store, located in Hong Kong’s retail heart of Causeway Bay, sold at a rate of HK$1.38 million ($A197,528.20) per square foot, breaking a previous Hong Kong record of HK$932,000 per square foot, the South China Morning Post reported on Friday.

“Buyers probably think that Hong Kong retail prices are still on the rise,” CBRE Executive Director for Retail Services Joe Lin told AFP news agency, saying the buyer may have thought the store was a good investment.

Mainland Chinese tourists will continue to visit the city in large numbers and will “keep the rent at a very high level”, Lin explained.

......Retail rents in Hong Kong’s prime locations stood at $US4334 per square foot last year, beating runner up New York at $US3300 per square foot by a large margin, CBRE said.
Keep that bolded sentence in mind.

Hong Kong protests take aim at 'locust' shoppers from mainland China
"The truth is that most mainlanders who come are not real tourists," columnist and TV show host Michael Chugani wrote recently in an opinion piece for the South China Morning Post.

"They are grocery shoppers. Hong Kongers have to compete with them not only for daily necessities but also for space on the MTR (mass transit system), in restaurants and shopping malls."

Last month, about 100 radical Hong Kongers descended on Tsim Tsa Tsui to protest against the growing phenomenon, waving placards describing mainland shoppers as "locusts," hurling abuse at Chinese tourists and scuffling with police.

Demonstrators staged a follow-up protest at the nearby Mongkok shopping precinct in Kowloon the following weekend, wheeling suitcases (viewed as a ubiquitous accessory for mainland Chinese shoppers), causing congestion outside shops by faking "shopping fatigue" and yelling "I have come to buy baby milk powder" in fractured Mandarin at visitors.

Hong Kong Anti-Mainlander Protest Highlights Frustration With Visitor Influx
The Hong Kong Tourism Board has reported that the number of visitor arrivals from mainland China last year was 41 million, a 17 percent increase on the year before.

The total number of visitor arrivals was 54 million.

University of Hong Kong social studies professor Paul Yip said most of the arrivals from mainland China were tourists who flock to Hong Kong's theme parks and hotels.

He said a smaller share of the arrivals, about one-quarter, were mainland shoppers who make brief daytime visits to buy everything from luxury watches to daily essentials such as baby milk formula.

Speaking to VOA by phone from Hong Kong, Yip said many Hong Kongers see the advantages that those mainland visitors bring.

"Hong Kong people know that tourism is one of the city's major sources of income and provides a lot of job opportunities for the retail and the services sectors," he said.

How mainlanders impact Hong Kong

But the more Hong Kong stores cater to the mainlanders, the more the city's shopping landscape has changed.

Yip said the expansion of shops popular with mainland shoppers in prime areas has raised rental costs for other stores liked by residents and foreign visitors from elsewhere, forcing those stores to shut down or relocate.

Mainlanders also have been competing with locals for space on Hong Kong's crowded trains and buses.

When was the last time Hong Kongers were calling Mainlanders locusts? Back in early 2012, right in the midst of the prior real estate slowdown. See Socionomics Watch—Hong Kong residents call Mainland Chinese "locusts"; Chinese call HKers "running dogs" for extensive coverage.

Banks may hope for the best, but they are also planning for the worst:
HSBC’s stress test includes a 50pc house price crash in China and Hong Kong
The HSBC stress test on page 140 included:

Mainland China suffers a 50pc reduction in property prices as an initial modest price decline becomes self-reinforcing through a deterioration in investor sentiment.
Mainland China equity prices fall by around 25pc and unemployment doubles to 7pc.
Mainland China GDP growth averages 3pc per annum in the two years following the crisis.
Hong Kong property and equity prices fall by around 50pc.

Just a stress test, mind you, not a forecast.

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