Linkages between direct and indirect property performance in Hong Kong

Abstract

Assesses the relationship between Hong Kong property company and commercial property market performance over 1984-94. Finds that property companies provide a useful source of transaction-based information about changing property market fundamentals. The unique property market characteristics in Hong Kong mean that information is impounded into direct property series quickly, within one quarter of being impounded into indirect property company stock prices. Finds a common “pure” property element that influences both property company and property market returns. This results in investors capturing some portion of Hong Kong property market returns by investing in property companies, as well as achieving liquidity and portfolio diversification.