Property investors rush to cash in on China's new "mini-Hong Kong"
By Tian Chen
HONG KONG (Reuters) - Investors are snapping up property near a proposed $45 billion business zone in the Chinese boom town of Shenzhen, betting that the government's plans to further open its capital markets with a "mini-Hong Kong" will spur real estate values.
Prices for some new residential projects near Qianhai, just an hour by car from Hong Kong, average around 33,800 yuan ($5,300) per square meter. That is nearly double the going rate in Shenzhen, a metropolis of 10 million crammed with ports and skyscrapers and home to Chinese corporate goliaths such as carmaker BYD Co and Huawei Technologies.
Growth in residential property prices in China's major cities has outpaced that of average household incomes by 16 times over the last two decades, according to a Credit Suisse report. Fears of a bubble led to a series of tightening measures to rein in prices, which fell in 21 cities in June versus 40 in May, according to official data.
"It's too early to decide whether it will become a bubble," said Raymond So, Dean of School of Business at Hang Seng Management College in Hong Kong, when asked if Qianhai would disappoint.
Detailed zoning plans are not yet in place, making it difficult to assess the real value of property in the Qianhai area, So said.
Qianhai, a 15-square-kilometre experimental zone for service sector reforms, had collected accumulated investment intentions worth 300 billion yuan as of July 16, said Shenzhen Party Secretary Wang Rong.
Investors have looked beyond the sparse and muddy reclaimed zone, snapping up unfinished properties, with a jump in sales clearly evident after China unveiled details of the project at a high-profile ceremony at the end of June.
In many ways, Qianhai resembles Shenzhen three decades ago before it became a pioneer of China's economic reforms. In 1980, the city was no more than a bucolic backwater of 30,000 villagers living off paddy fields and the sea. Continued...