Impact of Hong Kong On Real Estate
While the world has been distracted with the Covid-19 pandemic, and while much of the US has been consumed with rage, China as decided to ‘never let a good crisis go to waste.’
On today’s show we’re talking about the sweeping new security laws in Hong Kong and the impact of that on real estate in both Canada and the US.
When Hong Kong’s basic law came into effect in 1997, it left some unfinished business. There was supposed to be universal suffrage, the right for everyone to vote. That was never implemented. Secondly, there was supposed to be a new national security law. The first attempt to implement this in 2003 was abandoned when more than 500,000 people took to the streets to protest the proposed law.
Last week China’s central government imposed new national security legislation on the city of Hong Kong to stamp out a year of protests.
So far in the first week, it is estimated that several thousand people have been detained under the new security law.
So who is at greatest risk of being detained? Well, someone with a foreign passport could be charged with aiding a foreign government. Those with foreign passports have also been the ones who have been the most vocal opponents of China’s control of Hong Kong.
It is estimated that there are at least 300,000 and perhaps as many as 500,000 people who hold Canadian passports living in Hong Kong today. There are approximately 85,000 people with US passports living in Hong Kong.
If there is a crack down, it is reasonable to expect that a significant percentage of those who have the complete freedom to come to Canada or the US will do so. Of course, this is made a little more difficult as a result of the travel restrictions being imposed by the global pandemic.
If 300,000 Hong Kong residents were to come to Canadian cities, the demand on housing would be significant. The US has suspended the H1B Visa program temporarily during the pandemic. But if 85,000 Hong Kong residents were to descend upon American cities in a short time period, the impact would be significant
We already have market conditions with historically low inventory, rapidly increasing prices and properties routinely selling above asking price.
If we see an exodus from Hong Kong, I predict that it will happen quickly. Flights from Hong Kong are significantly reduced, but it will still be possible to have several thousand people a day leaving Hong Kong bound for North America. Despite the worries over Covid-19, I believe that people will fear prison in mainland China more strongly than the fear over catching Covid-19.
So here’s the question, “If you knew that there would be an exodus from Hong Kong into your home city, what would you do to be prepared?”
Which properties would you get under contract? Which real estate agents would you make sure to communicate with? What financing would you get lined up to take down properties in advance of their arrival?