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The land buying spree by mainland developers in Hong Kong is running out of steam.
In the 10 months through January, Chinese developers bought only 11 percent of the land sold at government tenders, down from as high as 53 percent in the fiscal year through March 31, 2016, according to an S&P Global Ratings report Monday. The ratings company cited tighter capital controls and greater scrutiny of overseas property buys by Chinese regulators.
Chinese Shopping Spree Slows
Mainland purchases as a share of Hong Kong government land sales
Source: S&P Global Ratings
One of the most aggressive buyers before the slowdown was HNA Group Co., which gobbled up four plots worth HK$27.2 billion ($3.5 billion) between November 2016 and March of last year. The debt-saddled group is taking the rare step of inviting outside investors to buy into two of those pieces of land.
Yet even with limited Chinese bidding, land prices are still rising — meaning higher housing prices down the road in what already looks like an overheated market. Last month, Wharf Holdings Ltd. bought land in Kowloon for a price that suggests the homes it builds will sell for as much as HK$40,000 per square foot, according to Knight Frank LLP, compared with HK$30,000 or HK$35,000 per square foot for existing homes.
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