But that lead has become increasingly fragile as the Hong Kong government has intervened more in the market in recent years, said Xie Xiancheng, vice-president of the institute and the chairman of Hong Kong Institute of Real Estate.
"Hong Kong's strengths lie in its openness," Xie said. "And government intervention will take that away from Hong Kong."
In a recent move, the Hong Kong government announced in October that it will begin charging a 15 percent stamp duty on homebuyers who are not permanent Hong Kong residents.
In contrast, Han Zheng, the new Party chief of Shanghai, said last month that the city must move faster to transform the functions of its government.
Many mainland cities, meanwhile, are not only improving their quality. They are also developing faster.
The institute forecast that China's urbanization rate will reach 65 percent by 2025, up from 51.27 percent in 2011. By then, China will be home to 900 million city dwellers, up from 690 million in 2011.
The process of rapid urbanization will help ensure that GDP and personal income in China continue to increase in the long term. By 2020, about 48 percent of China's population will belong to the middle class, the institute said.
Solar yacht put into use in SE China
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