BEIJING, Oct. 26 -- Hong Kong people have spent 9.4 billion yuan (US$116 million) in buying as many as 18,000 flats on the mainland in the first nine months of this year, up 8 per cent year-on-year, according to a survey.

    Land Power Group, a Hong Kong-based specialist on the mainland property market, predicted Hong Kong residents would buy 24,300-26,100 mainland units for 13.6 billion yuan (US$168 million) during the entire year.

    The survey includes 1,160 Hong Kong residents owning property on the mainland. Fifty-three per cent of the respondents' education level was university graduate or above, and 35 per cent of the respondents have monthly household incomes of HK$30,000 (US$3,846) or above.

    South China's Shenzhen, which neighbours Hong Kong, remained the prime city for Hong Kong property investors, accounting for 52 per cent of the total number of flat transactions recorded from January to September, up 4 percentage points from the same period last year.

    A total of 9,200 flats in the city were sold to Hong Kong residents, the survey said, adding that 73 per cent of respondents agreed the geographical proximity of Shenzhen to Hong Kong is the very reason to settle in Shenzhen over other mainland cities.

    About 70 per cent of Hong Kong investors owning a Shenzhen property expressed interest in buying another property.

    Guangzhou came after Shenzhen, amounting to 16 per cent, or 2,900 flats, of the total number.

    The property purchases in Shanghai, however, saw the largest drop of 3 percentage points amongst regions surveyed, highlighting concerns of a possible property bubble burst in the region.

    Chairman of Land Power Michael Choi noted that the mainland's property market is regaining growth momentum as the central government's macroeconomic control is coming to a close.

    Shenzhen property market marked an 8 per cent rise so far this year, and the survey particularly pointed out that the growth rate of the Guangzhou property market is set to outperform that of Shanghai and Beijing owing to the comparatively low price base there.

    The property-spending spree was partly due to the increasing economic integration between Hong Kong and the Chinese mainland and the appealing prospect of investment return on the mainland's property market.

    The dynamic economic performance on the Chinese mainland is the key reason attracting Hong Kong investors to settle and purchase property over the boarder.

    Out of the 1,160 total respondents, 33 per cent ranked the lodging demand as the main reason to purchase property in Shenzhen, and this figure has jumped from 31 per cent in 2004 and 21 per cent in 2003.

    About 30 per cent of the interviewees said they bought properties for investment purposes. This percentage compared with last year's 28 per cent and 20 per cent in 2003.

    "Hong Kong investors are hedging their bets on capital gain from the further appreciation of the RMB by investing in mainland's property market," Choi noted. "For the whole of 2005, the middle and high end property market in Shenzhen will see a 14 per cent gain, followed by 8 to 9 per cent in Guangzhou and 3 per cent in Shanghai."

    "Looking ahead, the implementation of phase three of the Closer Economic Partnership arrangement together with the establishment of a series of Hong Kong and Shenzhen boarder-crossing projects will attract more Hong Kong professionals to settle on the Chinese mainland," Choi said.

    (Source: China Daily)