Hong Kong - Cross-Border City Planning

Migration alters housing landscape
City planning needs to account for the growing number of Hongkongers moving to the mainland as the two economies continue to integrate
15 February 2006
South China Morning Post

The demand for land and homes in Hong Kong and the mainland is expected to evolve as the two economies continue to integrate, industry experts said.

The government should accordingly prepare for the changes and challenges ahead, they said, adding that the impact of growing ties between the two economies and the pattern of Hong Kong people working and living in the mainland should be studied against the backdrop of an evolving housing landscape.

Leung Chun-ying, convenor of the Executive Council and chairman of DTZ Debenham Tie Leung, said the government must think hard about city planning over the next 20 to 30 years. He cited a recent phenomenon whereby fewer Hongkongers were upgrading their properties - which meant switching from small to larger apartments - because more Hong Kong residents were moving to the mainland to work and live.

"You and I have friends and colleagues who bought flats eight to 10 years ago, and during that time they enjoyed promotions and salary increases," Mr Leung said.

"These people would have bought bigger Hong Kong flats if they did not have to spend most of their time in China."

Eddie Hui Chi-man, a professor in Hong Kong Polytechnic University's department of building and real estate, said: "In the long run, Hong Kong people may slow the pace of buying properties in Hong Kong, but this won't happen in the short term."

The number of Hong Kong residents working in the mainland in the 12 months to January last year was 228,900, or 6 per cent of Hong Kong's total employed population, according to a recent survey conducted by the Census and Statistics Department. This was 135 per cent higher than the 97,300 recorded in the September-to-October period in 1995. Of these, two-thirds were aged between 30 and 49. Property agents said this group represented the major force in property buying in Hong Kong.

Meanwhile, a survey conducted by the Central Policy Unit in November showed that more than 480,000 Hong Kong people were living, or spending substantial periods of time, in the mainland. Nearly 70 per cent of them were male, and 59 per cent were aged between 30 and 59.

Mr Leung said the trend of people moving to the mainland could not be quantified for lack of data. This was a signal to policymakers that a comprehensive study was urgently needed on Hong Kong's integration with the mainland.

Major infrastructure works, such as the 5.5km dual three-lane Western Corridor and the 7.4km Lok Ma Chau railway spur line linking Sheung Shui and Lok Ma Chau, meant a greater volume of people would be moving between Hong Kong and the Pearl River Delta.

He expected that more mainland companies, from trade and services to banking and finance, would invest in Hong Kong and move their offices over here, creating a greater need for quality commercial properties. At the same time there would be a drop in the use of industrial land here as more Hong Kong companies set up factories in the mainland.

Mr Leung said the government should release industrial land for use as commercial sites. He said all these changes would affect the government's long-term policy on land use.

According to Centaline (Holdings) chairman Shi Wing-ching, Hongkongers were not especially eager to migrate to the mainland because its culture and legal system were different from Hong Kong's.

"You many not see a migration in the next eight to 10 years, but you may in 30 years," he said.

Mr Shih also had observed a slowing down in upgrading activity in recent years, but believed it was the result of an economy still in the early stages of recovery and Hong Kong people being sceptical about the future.

According to Midland Realty, there was an overall drop in the size of houses bought as reflected in property transactions in 2003 and 2004.

In 2004, new homes with floor areas greater than 700 sq ft accounted for 47.9 per cent of primary transactions, compared with 52 per cent in 2003 and 2002, and 57.3 per cent in 2001.

In the secondary market, sales of three-bedroom units had dropped dramatically since the beginning of 2003.

From 2003 to 2005 only 51.6 per cent of homebuyers bought three-bedroom resale apartments, whereas the figure was as high as 54.6 per cent in the three years before 2002.>