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Friday, February 28, 2020, 14:28
Shenzhen beats Hong Kong for investors buying prime property
By Bloomberg
Friday, February 28, 2020, 14:28 By Bloomberg

This Sept 4, 2019 photo shows commercial and residential buildings in Shenzhen. (QILAI SHEN / BLOOMBERG)

If you’re looking to make money at the top of the housing market, head to the tech hubs.

Prime properties - broadly defined as the top 5 percent of residences in a market - in areas like Shenzhen, Berlin and San Francisco have outperformed cities such as Singapore, Paris and New York over the past five years, according to data compiled by real estate services firm Savills.

High-end abodes in Shenzhen have seen a 93 percent price rise over the past five years, with the average cost of such a property now priced at US$15,900 a square meter

High-end abodes in Shenzhen, one of China’s technology centers, led the gains with a 93 percent price rise in the five years ended in December. The average cost of such a property there is now US$15,900 a square meter, more than Los Angeles or Moscow. Berlin, which sports a thriving startup scene, rose 53 percent in the period, making it the best performing European city ranked by Savills. San Francisco was the best US performer with a 28 percent increase.

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“The fortunes of different prime real estate markets have closely followed the changing patterns of wealth generation and, in particular, the rise of tech as a source of wealth,” said Lucian Cook, head of residential research at Savills. “Some of the more mature prime markets, where banking and finance have historically played more of a role in wealth generation, have been held back by a combination of regulation, taxation and political uncertainty.”

China’s economic growth is also reflected in the ranking with six Chinese cities among the 22 tracked by Savills, although the spread of coronavirus may have shrunk some of these gains since December. Asian property markets have ground to a halt with home sales in China dropping 90 percent in the first week of February.

Even as recent gains piled up in tech centers and on the Chinese mainland, real estate in traditional strongholds remain the most expensive. Prime property in London costs on average US$20,700 a square foot, New York is US$27,000 and Hong Kong US$49,600.

READ MORE: HK's property market blows past another record

“Some of these more established markets are now looking comparatively good value, which is likely to narrow the divide in price growth,” Cook said. “However, areas able to tap into demand from newly created wealth are still expected to perform the most strongly.”


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