Property investors shift to Southeast Asia amid Hong Kong unrest

Property stocks in Hong Kong have plummeted since June, with developers being forced to offer discounts on new projects and cutting office rents. (Reuters)
Updated 14 October 2019

Property investors shift to Southeast Asia amid Hong Kong unrest

  • The summer of rage in Hong Kong has been fueled by years of simmering anger toward Beijing

KUALA LUMPUR: From luxury Singapore apartments to Malaysian seafront condos, Hong Kong investors are shifting cash into Southeast Asian property, demoralized by increasingly violent protests as well as the China-US trade war.

Millions have taken to the streets during four months of pro-democracy demonstrations in the southern Chinese city, hammering tourism while also forcing businesses to lay off staff — and the property sector is feeling the pain.

Property stocks in one of the world’s most expensive housing markets have plummeted since June, with developers being forced to offer discounts on new projects and cutting office rents.

Hong Kong businessman Peter Ng bought a condominium on the Malaysian island of Penang — which has a substantial ethnic Chinese population and is popular among Hong Kongers — after the protests erupted.

“The instability was a catalyst for me,” the 48-year-old stock market and property investor told AFP, adding he was worried about long-term damage to the Hong Kong economy if the unrest persists. “Investors will always look at things like that, political stability.”

And Derek Lee, a Hong Kong businessman who owns a Penang apartment, said he knew others in the semi-autonomous city who were considering investing in Southeast Asian property because of the unrest.

“People are thinking about how to quicken their ideas, how to make a more stable life,” the 55-year-old told AFP.

Adding to the allure of Malaysia is its relative affordability and prices much lower than Hong Kong.

The Malaysia site of Southeast Asian real estate platform Property Guru has seen a 35 percent increase in visits from Hong Kong, according to its CEO Hari Krishnan. 

While Hong Kong’s protests are primarily pushing for greater democratic freedoms and police accountability, the summer of rage has been fueled by years of simmering anger toward Beijing and the local government over falling living standards and the high costs of living.

Hong Kong’s property market is one of least affordable in the world with sky-high prices fueled, in part, by wealthy mainlanders snapping up investments in a city which has failed for years to build enough flats to meet demand.

But now mainland Chinese, who traditionally viewed property in Hong Kong as a safe investment, are opting for rival financial hub Singapore as a result of the protests and the US-China trade war, according to observers.

There has been a jump this year in sales of luxury apartments in the city-state — which like Hong Kong is known for pricey property — driven partially by mainland Chinese buyers, according to the consultancy OrangeTee & Tie.

“The protests in Hong Kong have made some of the (mainland Chinese) based there ... (more concerned) about investing in Hong Kong real estate, so they carry that investment to Singapore,” said Alan Cheong, executive director of the research and consultancy team at Savills.

As well as hitting China’s economy, trade tensions may have discouraged some Chinese from investing in the West and pushed them toward Singapore, with its mostly ethnic Chinese population.

“I think they don’t want to go to the West,” said Cheong.

Singapore is “the closest country culturally to China other than Hong Kong, and I think they feel more comfortable with that.”

There are further signs the stable, tightly ruled city is benefiting from the Hong Kong turmoil — Goldman Sachs last week estimated as much as $4 billion flowed out of Hong Kong to Singapore this summer.

And analysts warned there was little hope of Hong Kong’s property market recovering soon.


Jordan presses sweeping tax evasion crackdown to aid ailing economy

Updated 37 min 17 sec ago

Jordan presses sweeping tax evasion crackdown to aid ailing economy

  • Tax authorities have raided around 650 companies so far

AMMAN: Jordan’s Prime Minister Omar Al-Razzaz promised on Sunday to deepen a crackdown on tax evasion that officials say has deprived the country’s cash-strapped economy of billions of dollars’ revenue in recent years.
The government has gone after senior businessmen and former politicians suspected of tax dodging, money laundering and customs evasion in a weeks-long campaign that has gained greater urgency with the hit to state finances from the COVID-19 pandemic.
“Protecting public money and fighting corruption is a national duty,” Razzaz said in his weekly television address to the nation.
Tax authorities have raided around 650 companies so far, sometimes accompanied by security forces, according to officials who say this is the biggest campaign to combat tax evasion in decades.
The government said it had frozen the assets of dozens of companies and businessmen on suspected tax evasion charges. It added that it would track offshore havens where wealthy Jordanians have long parked cash to avoid taxes.
Some critics have accused the government of using the campaign to carry out a witch hunt against its political enemies, including some of Jordan’s leading business figures, including former ministers and senior politicians.
Officials deny that, saying the goal is to ensure justice and that no one is above the law.
The government has been using its wider powers under a state of emergency since March to give prosecutors and the main anti-corruption agency greater powers, and stiffen penalties.
A two-month coronavirus lockdown has crippled Jordanian businesses and slashed state revenues by tens of millions of dollars, leading to the sharpest economic contraction in two decades.
The government expects the economy to shrink by 3.5% this year, a far cry from an International Monetary Fund (IMF) estimate of 2% growth before the pandemic.
The aid-dependent country, already undertaking a tough three-year IMF reform program, tapped international debt markets this month to borrow $1.75 billion.