Mainland Chinese investors and property owners are cashing in on their Hong Kong real-estate holdings, as appetite for outbound investment evaporates in China, which has just reported the first contraction in its gross domestic product in four decades. 

“With COVID-19 coming at a time of trade tensions, some forced selling is highly likely,” said Simon Smith, senior director of research and consultancy at Savills. “Some mainland vendors whose businesses face cash flow issues and landlords of properties with multiple mortgages, will be prepared to consider offers (at deep discounts) on a selective basis.”

The selling contributed to a 4.5% decline in luxury home prices in Kowloon and the New Territories in the first quarter. In areas such as Kowloon Station and Kowloon Tong the drop was greater, at 6.9% and 4.9%, respectively, which equates to 20-30% in one year if that rate continues. 

“Areas traditionally popular among mainlanders have seen prices fall the most,” said Patrick Chau, senior director of residential development and investment at Savills.

Mainland buyers have also stopped buying Hong Kong property. The number of homes eligible for buyer's stamp duty, which is paid by non-local or company buyers, plummeted to a historic low of 42 in March, a 92% decline from a high of 534 in December 2017, according to the Hong Kong Inland Revenue Department.