Why Hong Kong Prices Will Rise, Even As China's Property Market Plunges

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  The Asia Report is supported by Cathay PacificEx-Morgan Stanley property chief Peter Churchhouse made an interesting distinction today on CNBC (via @theanalyst_hk).

China’s ridiculous property prices will decline up to 30 per cent in 2011.

Hong Kong’s ridiculous prices will rise, with office rents increasing up to 60 per cent.

The difference is simple supply and demand:

Hong Kong is producing way less floor space of all types than it used to 10, 15 years ago. So we’ve got a very strong economy, no question about that, credit is very cheap still, so you’ve got strong demand, low supply, economics 101 tells you prices have to go up in those environments…

[Whereas in China] the number of daily property sales now in the last month or so are running in about half what they were in September last year. But the production of housing is going up by 40 per cent.

Hong Kong already leads the 10 most expensive office districts in the world >

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