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Hong Kong Real Estate Industry Research Proposal

Hong Kong Real Estate Industry China and Hong Kong have evolved into fiercely competitive economic superpowers on the international scene across several markets and industries. This has become none more apparent than in the real estate market, which has experienced a recent "boom" in both Hong Kong and China, and seems to be proving some longevity. Although both of these countries are experiencing an influx of foreign investment in residential and commercial real estate, there are vast differences between China and Hong Kong, which are highly influential in investors' decisions regarding whether or not to purchase land, commercial buildings, or residences in these countries. In particular, China and Hong Kong differ substantially in factors relating to political history, especially in regards to Hong Kong's transition since 1997 into one country with two systems, having to compromise new Chinese authority with old British influenced rule of law. Other key factors in the attractiveness of the real estate markets in China and Hong Kong include differences in experience as free markets, supply limitations, currency strengths and weaknesses in comparison to the American Dollar, and varying inflations. The following discussion will center on factors that essentially make Hong Kong a more attractive location for investment in residential real estate than Mainland China.

It is highly apparent that the real estate industry has experienced an influx of foreign investment, but it has often been speculated that this is merely a bubble on the verge of bursting sometime soon. Individuals involved in market speculation, such as Jim Chanos, voiced a bearish prediction a while...

On the contrary, China has experienced immense investment into infrastructure development and the SOE has maintained a mid-to-long-term bullish view regarding the Chinese real estate industry. Nevertheless, the real estate industry in China may be viewed by others, especially Western investors, as more volatile and less stable than that of Hong Kong. What has led to this common perception? A look into the political and economic details of Hong Kong may provide some answers.
On July 1, 1997 Hong Kong fell back into the hands of Chinese rule when it became the Hong Kong Special Administrative Region of China. However, Hong Kong was also determined as a special economic zone of China, indicating that it could follow different legislation in regards to economic and tax law than that of China. This was termed as "one country, two systems" by China, and it implied that Hong Kong could continue to experience a high degree of autonomy from China, including exception from China's stifling socialist economic system. This allowed Hong Kong to maintain itself as a vibrant free market, which continued its success as an accessible and attractive location for foreign investment.

In general, Hong Kong is one of the most prominent financial centers internationally (Newell et al., 2007). On the world scale, it has the 9th largest stock market based on market capitalization, and is the second largest stock market in Asia, second only to Japan (Newell et al., 2007). Real estate companies comprise a significant contribution to all Asian stock markets, but this is especially the case in…

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References

Newell, Graeme; Wing, Chau Kwong; Kei, Wong Siu; McKinnell, Keith. "Factors Influencing the Performance of Hong Kong Real Estate Companies." Journal of Real Estate Portfolio Management. American Real Estate Society Cleveland State University. 2007. Retrieved March 23, 2011 from HighBeam Research: http://www.highbeam.com/doc/1P3-1261954211.html

http://www.economypoint.org/s/speical-economic-zone.html

http://www.phrasebase.com/countries/hong-kong
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