Hong Kong real estate prices have reached new lows not seen since the 1997-98 Asia Financial Crisis. On the other hand, residential real estate prices in Thailand, Malaysia and Singapore are reaching new highs. As for the Chinese mainland, the property market still has structural issues with no near term solution.
Problems with the real estate market in mainland China have historically made the regional investment options more attractive. However, prices in popular regional markets are reaching new highs. This puts prices out of reach for potential buyers in these markets.
Economists forecast that high prices will get worse before they get better, especially in Singapore. This makes real estate prices in Hong Kong look even more attractive.
It is especially relevant since Singapore has recently implemented very high barriers for foreigners to buy property, while Hong Kong is loosening policy restrictions.
So is it the right time to buy Hong Kong real estate? It may be a golden opportunity to gain a foothold in Asia’s pre-eminent financial center. Real estate prices are normally at nosebleed levels in Hong Kong, while buying opportunities such as this are often few and far between.
Indeed, high real estate prices have for so long made Hong Kong one of the world’s most expensive cities to live in. This has mainly been attributable to extremely high priced real estate and rental rates. In contrast, everything in Singapore seems expensive, not only real estate.
Real Estate Prices in China vs Regional Locations
What causes the pricing disparities in real estate markets? Starting in 2018, the real estate market in Mainland China (PRC) abruptly changed course. This was after decades of over investment which resulted in massive oversupply.
After years of this seemingly endless real estate boom, the PRC market transformed. Now it seems like an endless real estate bust. The effect on regional real estate markets has been profound.
The inverse price correlation with regional locations is high. This is because real estate prices in the PRC disproportionately impact smaller regional cities and countries. The distortion is caused by an influx of wealthy Chinese buyers looking to diversify outside the PRC.
If prices are too high in the PRC, they are looking for lower prices elsewhere. Or if the market is structurally unsound as it is now, they are looking for financial stability. Either way, Chinese buyers make big waves when too many of them arrive at the same time.
The China Effect On SE Asia
Depending on how you look at it, it can be either good or bad. Good because existing property owners benefit from price appreciation, or bad since it prices out local buyers seeking to purchase their first home.
Indeed, SE Asia is the go to option for Chinese buyers since it is in close proximity and also culturally appealing. This is especially true in Singapore which has a Chinese majority and shares cultural similarities.
Although it is not only Singapore but also Thailand and Malaysia that feel the China effect. If prices are too high in the PRC or in Hong Kong (as they usually are), then prices might look really good in neighboring countries. However, the best priced option at the moment seems to be Hong Kong.
Singapore is the World’s Most Expensive City in 2025
Indeed, residential real estate prices in Singapore, Malaysia and Thailand have significantly increased. This is despite high interest rates in developed economies and low interest rates in the PRC. The China effect propels prices higher in SE Asia nonetheless.
The case in point is Singapore which, as mentioned above, has very close ethnic similarities to China. In addition, similar to Hong Kong, Singapore is one of the best established financial centers in the world.
In further benefit, Singapore is also more disconnected from the sometimes overreaching Chinese government. This creates some additional benefits that can appeal to Chinese buyers.
Singapore has become the preferred destination for ultra-wealthy Chinese who set up family offices to manage their wealth and establish an offshore foothold. This propels real estate prices in Singapore even higher.
Singapore in 2025 is ranked as the most expensive city in the world to live in. The Singapore government has been forced to respond to the political backlash created by the surge of Chinese investment capital.
As a result, foreign buyers considering a real estate purchase in Singapore now face additional real estate sales tax. Plus, Singapore residency and citizenship requirements are much more stringent.
Nonetheless, Singapore real estate prices continue to rise. This makes the Hong Kong real estate market even more attractive.
The China effect On Hong Kong Real Estate
Hong Kong real estate prices are historically low. However, new buyers may wonder if this is the new norm or if prices will revert back to higher levels in the future. There are various factors to consider that should result in higher prices.
The first factor is that China has increased security measures in Hong Kong. This was obviously necessary in order to suppress foreign influence. As a result, Hong Kong is a much safer city to live in.
Additional security also creates economic stability for Hong Kong’s residents which makes residential real estate more attractive to own.
The second factor is that Hong Kong’s property developers are no longer able to monopolize the local market. This will create additional housing supply in the future. If so, real estate prices may have further to fall, but further price drops should be limited.
Third, there are many residents of the PRC seeking work in Hong Kong. They are able to fill the gap from fleeing foreign workers of Western origin who left Hong Kong during the pandemic and after the security upgrade. This will also create additional demand for Hong Kong real estate.
Although there will always be a role to play for Western “talent” in Hong Kong, hopefully the changes will result in higher quality foreign residents.
The Hong Kong Dollar Peg
Last but not least, Hong Kong’s currency, the “Hong Kong Dollar” is pegged to the US Dollar. The Hong Kong Monetary Authority maintains the peg by cloning US monetary policy.
However, since the Hong Kong economy is not identical with the US economy, the interest rate policy creates market distortions. This can have undesirable results.
For example, Hong Kong real estate prices dramatically increase when US interest rates are too low such as after the 2008 Global Financial Crisis. On the other hand, Hong Kong real estate prices go down when interest rates are disproportionately high in the US.
Indeed, starting in 2022 when the US Central Bank started raising interest rates, declines in Hong Kong real estate prices accelerated, reaching the new lows where they are now.
The upshot is that if lower interest rates in the US are on the horizon, the result could be an additional tailwind for Hong Kong property owners. For potential buyers sitting on the sideline, it could be the opportunity of a lifetime to purchase Hong Kong real estate.