The number of Hong Kong residents buying investment properties in Shenzhen has declined in the third quarter this year, a property consultant said yesterday.

"In the wake of Shenzhen government's announcement restricting Hong Kong investors to one unit, we saw fewer cross-border property transactions in the third quarter," said Michael Choi, chairman of Land Power International Holdings Ltd.

Slackened business has forced property developers to cut back on their advertising budget. Some 68 mainland real estate projects have placed advertisements in Hong Kong over the first three quarters this year, down 9 percent from 75 projects during the same period in 2006, according to statistics by Land Power, a Hong Kong-based property agent.

Shenzhen authorities announced in July that Hong Kong residents could buy no more than one residential apartment while other overseas residents are entitled to own a flat only after they've worked or studied in the city for at least one year.

Choi said the market might drop further in the last quarter but should remain promising in the long term, as the policy has been devised to curb speculation in the real estate market and avert a property bubble that could drag down the whole economy.

Demand still robust

From January to September, Hong Kong residents have bought an approximate of 18,000 apartments on the mainland with an investment of about HK$12.5 billion, representing a 7 percent and 16 percent year-on-year increase respectively, said Land Power.

Hong Kong real estate agents expected local demand for mainland properties to stay strong.

"The market will bounce back in six months," said Freddy Ho, director of Centaline Property Agency Ltd.

"When the policy was first announced, investors might be dazed by the uncertainties ahead and therefore had to suppress their buying desire. But given time, they will make a comeback to the property market," Ho said.

A Land Power survey suggested that Shenzhen remains the top choice for Hongkongers, followed by Guangzhou, Shanghai and Beijing.

There are good quality properties in other cities like Chongqing, Wuhan and Nanjing, but they are less attractive to Hong Kong investors, the survey said.

(HK Edition 10/24/2007 page6)