HONG KONG (Reuters) - An ambitious plan to transform the industrial towns of China’s Pearl River Delta into a modern economic zone powered by new technology ventures has triggered a rush of cross-border property investments between Hong Kong and the mainland.

FILE PHOTO: Private residential blocks are seen behind a cemetery at Tseung Kwan O district in Hong Kong, China September 15, 2018. Picture taken September 15, 2018. REUTERS/Bobby Yip/File Photo

The promise of reduced investment barriers in the region known as the Greater Bay Area (GBA) has driven greater partnerships between Hong Kong and mainland property firms, who are looking to capitalize on a two-way rush for homes.

In one direction, cashed-up investors from Southern China’s factory belt are moving into Hong Kong’s luxury apartment sector, where prices can be more than 100 times those on the mainland. In the other direction, Hong Kong residents are scrambling for bargains in mainland cities like Zhuhai and Zhongshan - some for quick profit, others a sea change.

“Hong Kong’s housing environment is very cramped, while the mainland provides good space for retirement,” said H.C. Lee, a 47-year-old Hong Kong resident who recently made a HK$4 million ($510,000) profit on the sale of her Hong Kong apartment in the New Territories. She used half that money to buy two apartments, one in Guangzhou and another in the third-tier city of Huizhou.

Her investment was also driven in part by expectations the commute between Hong Kong and Huizhou, currently about four hours, will be halved when a new rail connection opens in five years.

Faster transport links to the mainland that opened last year, including the world’s longest sea-crossing bridge and a high speed rail, are boosting the area’s appeal as an alternative destination for Hong Kong property buyers.

The plan to develop the area - which has a population of 68 million and a $1.5 trillion gross domestic product - will lead to an increase in such investments, say analysts and real estate agents.

The scheme is part of Beijing’s plan to increase social mobility between Hong Kong and its hinterland and bring the restive former British colony deeper into its China’s political and economic fold. It includes major initiatives at the national, provincial and local levels.

Some districts in Zhuhai and the third-tier city of Zhongshan recently relaxed home purchase rules to allow Hong Kong and Macau residents to buy new units. Previously, they could only buy second-hand apartments or commercial properties.

More incentives, such as tax subsidies and healthcare and education benefits, are also being introduced by policymakers to lure Hong Kong people to work and live in the GBA.

One Hong Kong investor, surnamed Lam, bought a 1.2 million yuan flat in Zhuhai in mid-May, her first in China. She hopes to use it as a holiday home and later sell it for a profit.

Driven by this interest, Chinese developers are stepping up marketing efforts in Hong Kong, such as cold calls to prospective buyers, a tactic not commonly used in the city in the past.

In one such call received by Reuters, Country Garden, China’s largest developer, offered a two-day tour of its sites in the GBA, with transport, accommodation and meals included.

The price for the developer’s 35 square meter apartments in the third-tier cities of Foshan and Zhaoqing is about 315,000 yuan ($45,522.20). That compares with about $800,000 for a similar sized unit in Hong Kong.

Promotional calls from developers Agile Group and Kaisa Group were also received by Reuters.

In recent weeks, Logan Property and Times China separately set up partnerships with Hong Kong realtors to promote their GBA developments.

“We saw the demand, that’s why we’re doing more marketing,” said Ben Ho, general manager of marketing management at Times China, which set up a partnership with agent V+ last month.

Property realtor Century 21, which partners with Logan Property, expects the market share of Hong Kong purchases in cities such as Zhuhai to double to 20% by the end of this year.

LUXURY LURE

The GBA’s growing pool of capital, driven by a booming tech ecosystem that is tipped to one day rival San Francisco’s, is in turn finding its way into Hong Kong’s residential market, already one of the world’s most expensive.

Property agents in Hong Kong said more China money is flowing into the luxury market after a softening last year, and they expect this segment will outperform the market this year, rising by up to 20%.

“Many bought on the GBA concept - they think Hong Kong has a lot of upside under the policy push and much tech talent and the management of unicorns will move to Hong Kong in the long run,” said L.S. Wong, Centaline senior associate director of research, referring to start-ups worth more than $1 billion.

JLL, another real estate consultancy, expects Hong Kong’s luxury properties to benefit the most from the GBA, as the tech economy fuels the growth of ultra-high net-worth individuals in southern China, which has already increased 24% over the last three years to around 22,000.

“Hong Kong’s high quality of medical services and education is expected to continue to attract mainland China’s ultra-high-net-worth individuals to move in,” JLL said.