Beijing has imposed a controversial national security law on Hong Kong which came into effect yesterday, Tuesday 30th June (Guardian, June 2020).
In response, Boris Johnson has indicated he will offer a new path to living and working in the UK for almost 3 million Hong Kongers – those eligible for a British National Overseas (BNO) passport (BBC News, July 2020).
What impact will the offer of a BNO Passport have on UK Property?
Well, supposing we take this to its most extreme for illustration’s sake – 3 million people is 40% of Hong Kong’s entire population. If every single eligible citizen were to decide to pick up a BNO passport and move over to the UK, without doubt, the effect would be significant. The combined populations of Edinburgh, Glasgow, Birmingham and Manchester make up just 2.6 million, so we’re talking about a lot of people here. And crucially, a lot of people with spending power.
Macgregor Director Rory Gammell spent 5 wonderful years living in Hong Kong. In the workplace, he came to realise that his Hong Kong Chinese colleagues were all aspiring to get on the property ladder – owning a flat was the number one goal for them. Hong Kong is subsequently a nation of savers, driven to work long hours in the hope of one day achieving this near impossible goal. As property in Hong Kong is so expensive, many expect to work for 25 years before they can reasonably expect to own their own home (South China Morning Post, Nov 2016).
One could argue that Boris is offering them an easier way of achieving this goal. In moving to the UK, home ownership should become a real possibility while freeing up more of their savings for a better standard of living.
So how compelling an economic argument is there for Hong Kongers to move to the UK?
Well, in real estate terms, it’s very compelling. Hong Kong continues to have the most expensive average house prices in the world, now at HKD 9.7m/ £1m (CBRE Global Living Survey, 2020).
In contrast, average house prices in UK cities are HKD 2.1m/ £217,000 (Hometrack, May 2020) – just 22% of Hong Kong’s figure. Hong Kongers are used to urban living so we can make an assumption that they will want to live in the UK’s key cities.
Let’s take Edinburgh as a real example, where average house prices sit at £239,200 / HKD 2.29 million for one of the world’s most desirable cities to live in (Deutsche Bank Mapping the World’s Prices, 2019). Beyond averages though, many Hong Kongers could aim for the most prestigious addresses in the city. A two bedroom flat on Melville Street, refurbished to the highest standards, could be bought for offers over £600,000 (Macgregor Property, For Sale) / HKD5.76m.
This represents the very best location and specification in Edinburgh, for significantly less than the average house price in Hong Kong. We’re also talking about freehold property here, rather than Hong Kong’s leasehold system, the latter of which raises more questions in terms of long term security.
Are we looking at the beginning of a wave of Hong Kongers coming to make a home of the UK’s cities?
Well, with China continuing to erode their future freedoms, it’s fair to assume that more and more Hong Kongers are considering their options elsewhere, and the UK just might be the best option for many of them.
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