HONG KONG (BLOOMBERG) - On a sweltering Sunday afternoon in Hong Hong's Sha Tin district, not long before police battled protesters with tear gas and rubber bullets in several locations nearby, eager homebuyers lined up for hours.
They were there to view mock-up apartments for an 840-unit development currently under construction, and many liked what they saw. Subscriptions exceeded the number of apartments on offer by 24 times, thanks in part to prices that were 10 per cent lower than comparable homes in the area.
Hong Kong's worst political crisis in decades has stunned the world with near-daily scenes of violent anti-government demonstrations. But so far at least, the turmoil has done little to dent the city's passion for real estate.
Even as some protesters rail against stratospheric housing costs, there are plenty of bargain hunters willing to bet that prices would not fall much in an economy with record bank deposits and a chronic lack of supply.
"If the project is appealing, the customers will come out for sure. This project's location is ideal and the pricing is attractive," said Tony Cho, an agent with Centaline Property Agency who was soliciting potential buyers outside the show flat.
That property should remain largely unscathed by an episode that set off a stock-market swoon and heaped damage on various sectors of the economy might sound counter-intuitive, especially given that Hong Kong has the world's least affordable housing.
Embattled leader Carrie Lam has warned of the city sliding into an "abyss", and says economic damage could be worse than during the deadly SARS virus outbreak in 2003.
But market watchers point to several factors, some unique to the city, that serve to prop up prices - including, in a roundabout way, the protests themselves.
Two months after a proposed extradition law triggered mass protests, overall housing prices are marginally above where they stood when the unrest started. Centaline's main property index hit a record in late June, and has since retreated 1 per cent.
Bank of America analyst Karl Choi has one of the more bearish market forecasts, predicting a 10 per cent short-term price drop because of the protests, similar to a short-lived slump in 2018. Several other analysts are calling for single-digit declines.
In Mr Choi's analysis, the overwhelming housing supply shortage - about 38,000 units over the next six years by one estimate - puts a cap on the scope for price weakness.
As Mrs Lam moves to shore up popular support, Mr Choi expects she will free up more land for public housing. That means less private-market supply, which could prop up prices.
That is not to say the market is breezing past the unrest. Just this week, developers including CK Asset Holdings and Sun Hung Kai Properties decided to postpone sales of new multibillion-dollar projects. And transactions in the secondary market are down sharply, especially for luxury homes.
Perhaps the ultimate long-term risk to the property market would be the loss of Hong Kong's status as a key international financial hub, said Bloomberg Intelligence analyst Patrick Wong.
Many prospective buyers are taking a wait-and-see approach to gauge whether the turmoil could lead to bargains, said Centaline principal account manager Joe Chan.
For Janice Wong, a 28-year-old human resources worker who got married last year, the protests brought with them an opening.
Wong and her husband bought a government-subsidised flat for about HK$5 million ($880,000) in July just as tensions reached a fever pitch. The income cap for a two-person family to buy government-subsidised apartments is set at HK$58,000 a month - 1.7 times the median income in the city.
"It's because of the protests that we decided to resume our apartment hunt," said Ms Wong, who had given up on house-hunting earlier in the year because of the frothy market.
"The room for bargains is larger now."
The relentless surge in home prices since 2003 has caused headaches for successive administrations because it exacerbated a wealth gap that's among the widest among developed economies. For the young people who formed the core today's protests and led the so-called Occupy Central campaign in 2014, owning a home is seen as a distant prospect.
Mrs Lam came to power in 2017 with an ambitious agenda to increase supply, after years of administrative cooling measures failed to damp price gains. Her government has proposed a range of supply-boosting initiatives, from taking over parts of a golf course to a giant land reclamation project off the island of Lantau.
As the unrest ties up Mrs Lam's administration, those plans might take a back seat. Instead, she will probably focus on shorter-term measures to prop up the ailing economy, like the US$2.4 billion ($3.3 billion) stimulus announced Thursday, said Ryan Ip, a researcher at Our Hong Kong Foundation.
Meanwhile, Billion Development & Project Management, which owns the project that was marketed in Sha Tin, starts taking firm orders on Saturday (Aug 17). Anthony Poon, the company's director of projects, sales and marketing, said he is optimistic.
"It's true that people have a strong demand for homes - it's a fact," he said.