(Repeats Sunday story with no changes)
* HK home prices up 364 pct since 2003, incomes up just 61
* Typical HK apartment costs 18.1 times gross median income
* Mainland developers increasingly outbid locals for land
* Mainland developers account for 44 pct total deal value
By Clare Jim and Venus Wu
HONG KONG, April 9 A pledge by Hong Kong's
incoming leader Carrie Lam to make the city's vertiginous
property prices more affordable could founder on the bottomless
pockets of mainland Chinese developers, who are bidding up the
price of land.
Home prices in Hong Kong have jumped 364 percent since 2003,
while the median monthly household income has risen just 61
percent, pushing home ownership out of reach for many.
While the mass protests that paralysed parts of Hong Kong
for 79 days in 2014 were primarily about demands for full
democracy from Beijing, many were also motivated by the rising
cost of living in the city, and the cost of accommodation in
A typical Hong Kong apartment costs 18.1 times gross annual
median income, according to research group Demographia, and the
city topped its survey of the world's most expensive places for
accommodation for the seventh straight year. Second-placed
Sydney was a long way behind on 12.2.
"Anything over a multiple of 5.1 is usually deemed as being
'severely unaffordable'," said Denis Ma, JLL's Head of Research
in Hong Kong.
With most of the city's more than 7 million citizens living
in cramped apartments - some no bigger than a parking
space - Lam, who takes over as chief executive on
July 1, is aiming to tackle the problem by increasing housing
and land supply.
But Alice Mak, head of the Hong Kong legislature's housing
panel, said the influx of capital from mainland developers will
make Lam's job very difficult.
"When there's overseas capital investment in Hong Kong, it
will stimulate the local property market. If the government
wants the housing market to grow at a stable rate, this will be
a very big challenge for them," Mak said.
Chinese companies successfully bid for six out of 27 plots
of land sold by the government in the fiscal year starting April
2016, Lands Department data shows, but in money terms they
accounted for 44 percent of total transactions.
In the previous fiscal year, Chinese firms paid more on land
deals than their Hong Kong competitors, taking up 55 percent of
the value and nearly half of the land sold.
Mainland developer KWG Property, which won a plot
of residential land for a record price co-bidding with Logan
Property, said lower lending rates and taxes make
development in Hong Kong more profitable than in China.
"There's still a gap between 'flour and bread prices' in
Hong Kong, but in China the prices are basically the same, so I
boldly predict that more and more Chinese developers will come
to Hong Kong to buy land in the future," KWG chairman Kong Jian
Min told an earnings conference last month.
The direct impact of this influx on home prices is stark in
the Kai Tak district, overlooking Victoria Harbour. Prices there
rose as much as 50 percent in less than a year, consultancy JLL
said, after Chinese conglomerate HNA Group bought
four land parcels in the past five months at eye-popping prices.
Hong Kong's homegrown property companies are being edged out
of their own market and are looking overseas to do business.
Local developer David Chiu, chairman of Far East Consortium
International, said he had become increasingly
disheartened after seeing his company's auction bids fall below
"In the past there were 20 developers fighting for land, but
now with Chinese developers joining, it means another 20 more,"
he told a conference in February, adding that he was glad his
company had already invested elsewhere and had plans to expand
in the UK and Australia.
"I think it'll be very difficult for Hong Kong's small and
medium developers to win a tender; it wouldn't surprise me if
Hong Kong developers became landlords relying only on rental
income (from commercial properties) after 10 years," he said.
Lam has already conceded in an interview with the Hong Kong
Economic Journal there is nothing she can do to stop outside
capital competing in the land bids.
Even established professionals say buying a home is an
increasingly daunting prospect and doubt that government will
succeed in holding down prices.
"They won't be able to help us," said 30-year-old accountant
"Buying a flat is not an impossible dream ... but it will
only get more and more difficult."
(Reporting By Clare Jim and Venus Wu; Additional reporting by
Katy Wong; Editing by Anne Marie Roantree and Will Waterman)