The consequences of Chinese outward real estate investment : evidence from Hong Kong land market

Abstract

This paper explores the Chinese outward real estate investment in Hong Kong's land market from 2011 to 2019. The property developers from Mainland China are attracted to Hong Kong market and win a significant portion of land parcels in government land auctions since 2011. The results reveal that these developers pay much higher land premium to acquire land than local developers. The expected gain from the land development, measured by the stock market reaction to land acquisition, is significantly positive for Chinese developers and much larger than the gain for local developers. Taken together, our findings indicate that outward real estate investment helps Chinese property developers seek new markets and improves the profitability and financial performance; meanwhile, the Chinese outward investment also pushes up the real estate price in the host market.