Back in 1998 in the aftermath of the Asian Crisis, Hong Kong embarked on an ambitious quest to become a “World City” in the same fashion as New York and London. It highlighted human capital and the living environment as pivotal to its development. Now, 14 years after the 1997 handover, the focus is not on whether Hong Kong has succeeded in that quest but on home prices, which are almost back to 1997 highs. Observers now say: Hong Kong has another property bubble on its hands.

But if Hong Kong has turned itself into a World City, is it so surprising that home prices are up around 1997 highs?

Mortgage rates and the local impact of QE2 dominate any discussion of Hong Kong’s property market. But the larger trend of Hong Kong’s successful transformation into a truly cosmopolitan city is being overlooked.