| Eleanor Wason (AFP)  Mainland Chinese once fled to the slums of Hong Kong's Kowloon to escape poverty, war and communism but many mainlanders in the district these days are seeking swimming pools and harbour views.
A rising number of mainland buyers, spurred by newfound wealth and low interest rates, are helping the city, despite its recent recession, set new records for luxury property prices.
Their tastes are also reshaping the market, with Kowloon fast becoming the prime site for expensive apartments, supplanting traditionally pricey areas on Hong Kong island like the Peak and the Mid-Levels.
"There is a lot of buying by mainland Chinese in the luxury rather than the mass-market segment," said Simon Smith, head of research in Hong Kong for international property agent Savills.
"And they seem to be less constrained by traditional views of what constitutes a luxury development."
Agents' estimates for the percentage of new top-end Hong Kong homes now bought by mainlanders range from 10 to 40 percent.
Such buyers, who typically pay in cash, are not just lured by the views of Victoria Harbour and opulent clubhouses offered by many of Kowloon's residential developments.
Agents cite residency as a major draw since the city introduced a scheme in 2003 that gives temporary resident status to foreigners investing at least 6.5 million Hong Kong dollars (about 840,000 US) in Hong Kong assets.
Seven years of temporary residency can lead to permanent right of abode.
Almost a third of mainland investors buy for such reasons, according to property company Centaline.
A Mrs Ye, from Nanjing in Jiangsu province, who declined to give her full name, bought a three-bedroom apartment in Kowloon three years ago.
"We bought for both migration and investment reasons," she told AFP.
"We mainly want to give our children a good living and educational environment," she said, adding that while the property was now rented out the family planned to eventually live there.
Hong Kong's luxury property prices have rebounded 25-28 percent so far this year, according to real estate group CB Richard Ellis.
While the mainland property market is also booming, Hong Kong has lower real estate taxes and is seen by some as a safer bet with clearer rules on planning and private property, agents say.
"The investment policy in Hong Kong is clearer. The investment is not going to be affected by macro-control, so it is more secure," said Liu Zhizhong, a board member of Midland Realty in Guangzhou.
The resilience of mainland buying interest despite the recent global financial crisis has certainly been a boon to the latest Kowloon development -- the Cullinan twin towers.
Two penthouses in the towers were each put on sale for a record 38.5 million US dollars, developer Sun Hung Kai said earlier this month.
It raised the asking price by 20 percent for the 4,000 square foot (371 square metre) apartments, which have their own roof gardens and swimming pools, because of strong demand.
The Cullinan, named after the world's largest diamond, is Hong Kong's tallest residential development.
The penthouses will be the city's priciest apartments if they are sold at the 300 million Hong Kong dollar asking price, which translates into 75,000 dollars per square foot.
Until now, Hong Kong's most expensive flat by that measure has been a unit on the 80th floor of neighbouring apartment block The Arch. It sold last year for 225 million dollars, or 40,931 dollars per square foot.
The Cullinan and the Arch are part of a cluster of high-rise developments on reclaimed land around Kowloon station that have proved popular with mainland buyers for their proximity to transport links, as well as Elements, a colossal shopping mall packed with designer shops.
Used to the spanking new apartment blocks sprouting up across mainland China's cities, they prefer them to the older, smaller buildings on Hong Kong island, where there is little space for new developments, agents say.
The Cullinan's facilities include two swimming pools, a spa, gyms for both adults and children and a 100-seat banquet hall served by Michelin chefs.
"The flats (in the new Kowloon developments) are in general better quality than those in the Mid-levels and seen as value for money," said Benedict Ma, associate director of research at CB Richard Ellis.
"You'd be hard pressed to find local buyers that could afford 30,000 to 40,000 dollars per square foot."
As China's economy powers towards a government target of eight percent growth in 2009, compared with a forecast 3.5-4.5 percent decline in Hong Kong, agents and developers are casting a wider net in their hunt for new wealthy mainland investors.
Property developer Cheung Kong for example has started to run roadshows in mainland China.
Investors once came mainly from Shanghai and Beijing but are now emerging from other rapidly growing cities such as Hangzhou.
"Status is built into it. They can tell people: 'I bought an apartment in Hong Kong," said CB Richard Ellis' Ma.
"It's China but it's not China, it's a way of diversifying your investments and it's a way of getting currency out of (mainland) China."
Copyright © 2009 AFP. All rights reserved.
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