I'm looking into some mass market opportunities, thinking that we may start to see
middle class mainlanders investing in HK.
That successful launch of Central Park (new building near Shenzhen) may be a bellwether.
As the luxury end soars, profits are also trickling down.
But I will be seeking yield, ie something that can return 7% or more, if I can find it.
Saw an interesting example in Discovery Bay yesterday:
+ 3 BR place (911 sf) purchased at hk$2.88 million
+ hk$300,000 spent on upgrade, turning it into a 2BR, with modern appliances, etc
+ rentable now at hk$18k (7.00% gross yield) or even hk$20k (8.00%)
Location?: right near the peer- I was impressed by the renovation job and location.
We also look at the live-aboard boats in the DB marina.
Very nice, but expensive:
60ft boat price (incl. debenture) : hk$3.5 million
100% finance* at 8% : $ 23,330
mooring etc. costs.... : $ 12,000 monthly
Total Monthly cost.... : $ 35,330
*(60-70% would be normal, but you should price in a ROE, this is IO calculation)
Full Version: The Hong Kong Thread
(from a similar thread on GEI):
You are Right.
RENTS are rising smartly, as shown by a chart in Today's SCMP.
Eyeballing the chart, I see:
Average Rents, 50 Housing Estates
+ Aug 2005 : $13.20 psf
+ July 2006 : $13.30 psf
+ July 2007 : $15.30 psf (that's up about 15% in one year)
Here are some figures they gave for year-to-date (8 months):
Area========= Price psf : Rent : ytd chg = annualised
Central Mid-levels : $ 9,420 : $ 27 : + 6.0% = + 9.0%
Happy Valley....... : $ 7,604 : $ 27 : +12.2% = +18.3%
North Point.......... : $ 4,808 : $ 18 : + 9.4% = +14.1%
Chai Wan............ : $ 3,371 : $ 13 : + 7.4% = +11.1%
Kowloon Tong...... : $ 5,900 : $ 20 : + 3.8% = + 5.7%
QUOTE(ChauTauVillager @ Sep 5 2007, 08:35 AM) 
... it does help there does also seem to be a real improvement on wages/economy...
You are Right.
RENTS are rising smartly, as shown by a chart in Today's SCMP.
Eyeballing the chart, I see:
Average Rents, 50 Housing Estates
+ Aug 2005 : $13.20 psf
+ July 2006 : $13.30 psf
+ July 2007 : $15.30 psf (that's up about 15% in one year)
Here are some figures they gave for year-to-date (8 months):
Area========= Price psf : Rent : ytd chg = annualised
Central Mid-levels : $ 9,420 : $ 27 : + 6.0% = + 9.0%
Happy Valley....... : $ 7,604 : $ 27 : +12.2% = +18.3%
North Point.......... : $ 4,808 : $ 18 : + 9.4% = +14.1%
Chai Wan............ : $ 3,371 : $ 13 : + 7.4% = +11.1%
Kowloon Tong...... : $ 5,900 : $ 20 : + 3.8% = + 5.7%
EXCERPTS from post #68
MARKET TALK: Midland +5.2%; Ppty Deals Hit 27-Month High
2007/09/05
1118 [Dow Jones] Developers continue recent outperformance with subindex +1.5% vs HSI +1.0%;
estate agent Midland (1200.HK) stands out, +5.2% at HK$5.72, probably on extra boost from land registry data reported by The Standard showing August property transactions hit 27-month high, (+24.9% on-month at 11,480 units, +27.9% at HK$36.8 billion in value terms), underpinned by HK's robust economic growth.
MARKET TALK:Developers Outperform;30% Upside In Ppty Prices-BS
2007/09/03
1051 [Dow Jones] Property sub-index down 0.3% but manages to outperform HSI's 0.6% decline on profit-taking, on hopes of U.S. interest rate cut later this month. Bear Stearns advises to Overweight HK developers, tips up to 30% upside in residential property prices in next 12-18 months, underpinned by rising household incomes, positive wealth effect, declining real interest rates, rising rental costs. Meanwhile, housing completions will decline considerably in coming years on lower land supply.
See Post#68
MARKET TALK: Midland +5.2%; Ppty Deals Hit 27-Month High
2007/09/05
1118 [Dow Jones] Developers continue recent outperformance with subindex +1.5% vs HSI +1.0%;
estate agent Midland (1200.HK) stands out, +5.2% at HK$5.72, probably on extra boost from land registry data reported by The Standard showing August property transactions hit 27-month high, (+24.9% on-month at 11,480 units, +27.9% at HK$36.8 billion in value terms), underpinned by HK's robust economic growth.
MARKET TALK:Developers Outperform;30% Upside In Ppty Prices-BS
2007/09/03
1051 [Dow Jones] Property sub-index down 0.3% but manages to outperform HSI's 0.6% decline on profit-taking, on hopes of U.S. interest rate cut later this month. Bear Stearns advises to Overweight HK developers, tips up to 30% upside in residential property prices in next 12-18 months, underpinned by rising household incomes, positive wealth effect, declining real interest rates, rising rental costs. Meanwhile, housing completions will decline considerably in coming years on lower land supply.
See Post#68
hello dr bubb,
I am very interesed in buying a property in HK, being a Taiwan native......and want to put my money out of UK...
However I understand you have to be a HK resident to buy a property??
Would appreciate any advice....I can't seem to msg you....
would it be easier to go on GEI?
I am very interesed in buying a property in HK, being a Taiwan native......and want to put my money out of UK...
However I understand you have to be a HK resident to buy a property??
Would appreciate any advice....I can't seem to msg you....
would it be easier to go on GEI?
You don't have the be a resident to buy Hong Kong properties. Many Taiwanese own properties in Hong Kong.
I understand you can apply for resident if your purchase is above HK$6.5M.
I understand you can apply for resident if your purchase is above HK$6.5M.
Holiday Disappoints Real Estate Firms (in Shenzhen)
Much to their disappointment, real estate developers in Shenzhen have found that the just-concluded week-long National Day holiday did not yield the bumper harvest of deals that they had come to expect.
. .
"The State released a new policy in late September to raise the downpayment for property mortgage loans to 40 percent for those buying second properties... Many more bet that the State will churn out more policies to rein in the rampant growth in prices."
"The price of housing in Shenzhen has risen to such an extent that some apartments in Shenzhen are more expensive than those in Hong Kong. And the rental return in Hk is generally higher than those in Shenzhen.
Quite a few Shenzhen people are turning to property in Hong Kong to avoid the effects of possible new policies aimed at manipulating the real estate market on the mainland."
Wang said his firm had organised on-site visits to several premium properties for more than 200 Shenzhen people during the holiday. More than 10 percent of them said they were keen to buy.
- excerpts from article in today's China Daily, page 4
the quotes are mostly from Wang Shuquan, of Miland Holdings (Shenzhen)
== more frequent comments on GEI, but I will continue to post the odd one here ==
Much to their disappointment, real estate developers in Shenzhen have found that the just-concluded week-long National Day holiday did not yield the bumper harvest of deals that they had come to expect.
. .
"The State released a new policy in late September to raise the downpayment for property mortgage loans to 40 percent for those buying second properties... Many more bet that the State will churn out more policies to rein in the rampant growth in prices."
"The price of housing in Shenzhen has risen to such an extent that some apartments in Shenzhen are more expensive than those in Hong Kong. And the rental return in Hk is generally higher than those in Shenzhen.
Quite a few Shenzhen people are turning to property in Hong Kong to avoid the effects of possible new policies aimed at manipulating the real estate market on the mainland."
Wang said his firm had organised on-site visits to several premium properties for more than 200 Shenzhen people during the holiday. More than 10 percent of them said they were keen to buy.
- excerpts from article in today's China Daily, page 4
the quotes are mostly from Wang Shuquan, of Miland Holdings (Shenzhen)
== more frequent comments on GEI, but I will continue to post the odd one here ==
(from a new thread on GEI):
I disagree with this. You need to look deeper.
+ Yields are low-ish. You can get 7% for older properties, but 4-5% is not unusual for 3-5 year old properties
+ A big difference with London is this: RENTS ARE RISING FAST in Hong Kong.
The average rent in HK was probably up 10-15% in the past year, and the rate of increase is rising.
Thus, at this rate of growth a 5% yield becomes a 5.5 - 5.75% yield within a year
+ HK incomes are rising too, which is helping to support rental growth
+ HK $ interest rates (with mortgages at 4.75%) are significantly less than the UK
+ The HK market is not yet corrupted by overly-aggressive lending. For second and third properties,
it is difficult to borrow more than 70% (unless you have a very high income). Borrowing through a
company without a personal guarantee is virtually impossible* even for a 50% advance)
*(If anyone knows a bank that will lend 50% without a guarantee, please let me know)
/see: http://www.greenenergyinvestors.com/index.php?showtopic=2479
QUOTE(banished @ Oct 16 2007, 12:35 PM)
If the very best mortgage is 4.8% (but more likely 6%) then the rental yield is barely , if not at all, covering the interest. If you take in tax and all the rest then you are effectively subsidising the investment. Is this the normal pattern in Hong Kong where capital appreciation is the only reason to invest?
I disagree with this. You need to look deeper.
+ Yields are low-ish. You can get 7% for older properties, but 4-5% is not unusual for 3-5 year old properties
+ A big difference with London is this: RENTS ARE RISING FAST in Hong Kong.
The average rent in HK was probably up 10-15% in the past year, and the rate of increase is rising.
Thus, at this rate of growth a 5% yield becomes a 5.5 - 5.75% yield within a year
+ HK incomes are rising too, which is helping to support rental growth
+ HK $ interest rates (with mortgages at 4.75%) are significantly less than the UK
+ The HK market is not yet corrupted by overly-aggressive lending. For second and third properties,
it is difficult to borrow more than 70% (unless you have a very high income). Borrowing through a
company without a personal guarantee is virtually impossible* even for a 50% advance)
*(If anyone knows a bank that will lend 50% without a guarantee, please let me know)
/see: http://www.greenenergyinvestors.com/index.php?showtopic=2479
Entirely agree with all these comments. Just by way of contribution, have just leased out my 2nd apartment in Western Mid-Levels - 10 year old property - at a yield of 6% on entry cost, 5.75% on all in investment cost ( incl. stamp duty, refurb etc.) to a corporate let. Took a couple of months to get the right price / tenant. With rising rentals, continuing rapid economic growth, dollar depreciation, increasing capital flows into Hong Kong from China, this investment is clearly going to make more than a decent equity capital return, and mortgaged at up to 70% more than covers finance cost.
I don't know finance houses that will lend to e.g. BVI companies without personal guarantee beyond 50% finance, but would be similarly interested to hear of any!
I don't know finance houses that will lend to e.g. BVI companies without personal guarantee beyond 50% finance, but would be similarly interested to hear of any!
QUOTE(Profitseeker @ Oct 17 2007, 06:39 AM)
I don't know finance houses that will lend to e.g. BVI companies without personal guarantee beyond 50% finance, but would be similarly interested to hear of any!
50% would suit me. That doesnt seem to be easier either.
The difficulty in obtaining this credit is a good thing, in that it shows the banks are still
exercising restraint in Hong Kong.
Some more bullish stats in today's SCMP
- 63.6% fall in completions in the first nine months of 2007
- 13.8% drop in unsold + units under construction
Completions of new private residential units may hit a record low this year:
4,400 versus 12,100 units last year (first nine months)
Decline was due to lack of sites sold in government auctions two years ago.
Full year figure could be under 10,000 units, a record low
New auctions this year, should force up supply in two years time.
vacancy rate is expected to drop from 5.9% at the end of last year
- 63.6% fall in completions in the first nine months of 2007
- 13.8% drop in unsold + units under construction
Completions of new private residential units may hit a record low this year:
4,400 versus 12,100 units last year (first nine months)
Decline was due to lack of sites sold in government auctions two years ago.
Full year figure could be under 10,000 units, a record low
New auctions this year, should force up supply in two years time.
vacancy rate is expected to drop from 5.9% at the end of last year
Hong Kong is GOING PARABOLIC
A mad rush into property has started
= = =
THE WEAK DOLLAR and tight supply of Newly-completed flats coming onstream...
Has caused the HK Builder stocks to psuh up in a parabolic move ... update
I am also hearing that the physical market is shooting up on massive demand
For example, at Caribbean Coast in TC, as of Sunday there were 71 properties sold in October (so far) versus September's more normal 40.
That's a virtual doubling of sales since last month.
A mad rush into property has started
= = =
THE WEAK DOLLAR and tight supply of Newly-completed flats coming onstream...
Has caused the HK Builder stocks to psuh up in a parabolic move ... update
I am also hearing that the physical market is shooting up on massive demand
For example, at Caribbean Coast in TC, as of Sunday there were 71 properties sold in October (so far) versus September's more normal 40.
That's a virtual doubling of sales since last month.
(from Friday's SCMP): Lower rates are helping the Mass Market
Property Agents upbeat over market outlook
+ Hk's 0.25 rate cut might help an already strong market, encouraging more people to buy
+ Previously, transactions dropped in late-2005 when developers launch new projects at "higher than expected prices"
(but those projects have all been absorbed, and there are few new properties available)
+ In the past three months, prices rose 15.7% for luxury units, 8.0% for mass market- says Jones Lang Lasalle.
+ JLL's previous forecats was: a 20% jump for luxury, 10% for mass-market, they have now upped that to 15% for mm
+ Prices for mass market increase 3-5% last month. And:
"Property prices in major hosuing estates such as Taikoo Shing in Quarry Bay jumped 5 to 10% in a month"
+ Island Lodge was just launched. 40 units sold in one night at an average price of hk$8,500 psf versus
prevailing prices of hk$5,500 - 8,400 for second hand.
(Island Lodge is 45-storey residential bldg. with 184 units- devloped by Swire & China Motor Bus)
Property Agents upbeat over market outlook
+ Hk's 0.25 rate cut might help an already strong market, encouraging more people to buy
+ Previously, transactions dropped in late-2005 when developers launch new projects at "higher than expected prices"
(but those projects have all been absorbed, and there are few new properties available)
+ In the past three months, prices rose 15.7% for luxury units, 8.0% for mass market- says Jones Lang Lasalle.
+ JLL's previous forecats was: a 20% jump for luxury, 10% for mass-market, they have now upped that to 15% for mm
+ Prices for mass market increase 3-5% last month. And:
"Property prices in major hosuing estates such as Taikoo Shing in Quarry Bay jumped 5 to 10% in a month"
+ Island Lodge was just launched. 40 units sold in one night at an average price of hk$8,500 psf versus
prevailing prices of hk$5,500 - 8,400 for second hand.
(Island Lodge is 45-storey residential bldg. with 184 units- devloped by Swire & China Motor Bus)
(as posted on the HK property thread on GEI:
/see: http://www.greenenergyinvestors.com/index....=920&st=100
QUOTE (ChauTauVillager @ Nov 5 2007, 09:40 AM)
HONGKONG RESIDENTIAL PRICES TO RISE 50% BY END-2009 - MERRILL LYNCH
HONG KONG (Thomson Financial) - Merrill Lynch is expected prices in Hong Kong to rise by 50 percent by end-2009, driven by a housing shortfall and rising demand for apartments.
"We have turned maximum bullish on Hong Kong residential and expect residential prices to rise 50 percent by end-2009," said Merrill Lynch analyst Keith Yeung.
Merrill is forecasting that about 10,000-11,000 units will be completed yearly from this year to 2010, compared with an annual demand of 19,500 units.
More buyers from the mainland, strong local economy, high job security, rising housing income and a buoyant stock market are keeping demand for local housing strong, Yeung said.
"Genuine demand will likely remain resilient in the coming 15 years despite the slow population growth. The low primary transactions in the past two years mean strong pent-up demand has been accumalated in the residential market," he said.
Hong Kong developers are also unlikely to sell at low prices as land prices have risen over the years, Yeung said. Housing inventory has dropped to a record low of 6,470 units, he said.
Residential prices have gone up 10 percent from the start of the year, while transaction volume surged to 90,709 units, exceeding 2006 full year volume.
"By end-2009, we expect residential prices will still be 11 percent below the peak in 1998 and housing affordability will remain below the historical average," Yeung said.
HONG KONG (Thomson Financial) - Merrill Lynch is expected prices in Hong Kong to rise by 50 percent by end-2009, driven by a housing shortfall and rising demand for apartments.
"We have turned maximum bullish on Hong Kong residential and expect residential prices to rise 50 percent by end-2009," said Merrill Lynch analyst Keith Yeung.
Merrill is forecasting that about 10,000-11,000 units will be completed yearly from this year to 2010, compared with an annual demand of 19,500 units.
More buyers from the mainland, strong local economy, high job security, rising housing income and a buoyant stock market are keeping demand for local housing strong, Yeung said.
"Genuine demand will likely remain resilient in the coming 15 years despite the slow population growth. The low primary transactions in the past two years mean strong pent-up demand has been accumalated in the residential market," he said.
Hong Kong developers are also unlikely to sell at low prices as land prices have risen over the years, Yeung said. Housing inventory has dropped to a record low of 6,470 units, he said.
Residential prices have gone up 10 percent from the start of the year, while transaction volume surged to 90,709 units, exceeding 2006 full year volume.
"By end-2009, we expect residential prices will still be 11 percent below the peak in 1998 and housing affordability will remain below the historical average," Yeung said.
/see: http://www.greenenergyinvestors.com/index....=920&st=100
A PAUSE after a very hot month...
(Excerpts from Wednesday's SCMP Property section):
Secondary Transactions drop 25% as buyers resist high prices
Freddy Wu Yat-fat, CEO of Hong Kong Properties said (Hong Kong) home prices "surged by 8 to 10 per cent over the period mid-October to mid-November."
Some buyers were cautious (after the big surge)...
"We will see a new buying spree, however, if the US decides to cut interest rates and Hong Kong follows suit," said David Chan Tai-Wai of Ricacorp.
(Excerpts from Wednesday's SCMP Property section):
Secondary Transactions drop 25% as buyers resist high prices
Freddy Wu Yat-fat, CEO of Hong Kong Properties said (Hong Kong) home prices "surged by 8 to 10 per cent over the period mid-October to mid-November."
Some buyers were cautious (after the big surge)...
"We will see a new buying spree, however, if the US decides to cut interest rates and Hong Kong follows suit," said David Chan Tai-Wai of Ricacorp.
(From GEI's HK property thread )
SIZE MATTERS - in the HK property market
"Large flats on Hong Kong Island now cost three times
as much per square foot as small ones."
I saw that article too.
It certainly suggests that you can make money by purchasing two smaller flats in combining them, in order
to get the price uplift the market commands for larger flats. (One of GEI"s posters is doing that in CS, Tung Chung.)
I wanted to reproduce the charts here from the article. They show:
+ Real GDP per capita zooming up from Hk$170,000 or so in 1997, to HK$230,000 today.
+ Meantime, average flat size has changed hardly at all
+ Jake Van der Kamp says: "People badly want more space and can afford more space, but just cannot get it.
.. It isnt there.
+ Luxury flats account for only 2 percent of the market, and demand is volatile. Developers dont want to take the
.. risk in building larger flats, he says.
I reckon that they will find a way, even if it means combining smaller flats. But when I look at some of the new
properties coming onto the market, there seem to be fewer smaller flats (up to 750sf) , and not many large ones.
There are only about 10,000 new flats coming on the market in the next 6 months (down from a more normal
20,000 flats), and so demand for big luxury flats may stay tight. Property entrepreneusr that are good at combining
flats, especially in hot markets like HK island, may have a real opportunity.
SIZE MATTERS - in the HK property market
"Large flats on Hong Kong Island now cost three times
as much per square foot as small ones."
QUOTE (stumbo @ Dec 3 2007, 03:18 AM)
From SCMP:
...It is that prices for luxury flats on Hong Kong Island have now exceeded their 1997 peak, according to official government statistics. This isn't true of luxury flats in Kowloon or in the New Territories yet, but it is worth noting because the average price for flats across the territory overall stands at only about 60 per cent of the 1997 peak.
...large flats on Hong Kong Island now cost three times as much per square foot as small ones. Let me repeat. This is price per square foot, not price of the entire flat. A flat that is four times as large as a small one costs about 12 times as much as that small one.
...the standard of our living accommodation has simply not kept pace with the growth of our wealth. People badly want more space and can afford more space but just can't get it. It isn't there.
...It is that prices for luxury flats on Hong Kong Island have now exceeded their 1997 peak, according to official government statistics. This isn't true of luxury flats in Kowloon or in the New Territories yet, but it is worth noting because the average price for flats across the territory overall stands at only about 60 per cent of the 1997 peak.
...large flats on Hong Kong Island now cost three times as much per square foot as small ones. Let me repeat. This is price per square foot, not price of the entire flat. A flat that is four times as large as a small one costs about 12 times as much as that small one.
...the standard of our living accommodation has simply not kept pace with the growth of our wealth. People badly want more space and can afford more space but just can't get it. It isn't there.
I saw that article too.
It certainly suggests that you can make money by purchasing two smaller flats in combining them, in order
to get the price uplift the market commands for larger flats. (One of GEI"s posters is doing that in CS, Tung Chung.)
I wanted to reproduce the charts here from the article. They show:
+ Real GDP per capita zooming up from Hk$170,000 or so in 1997, to HK$230,000 today.
+ Meantime, average flat size has changed hardly at all
+ Jake Van der Kamp says: "People badly want more space and can afford more space, but just cannot get it.
.. It isnt there.
+ Luxury flats account for only 2 percent of the market, and demand is volatile. Developers dont want to take the
.. risk in building larger flats, he says.
I reckon that they will find a way, even if it means combining smaller flats. But when I look at some of the new
properties coming onto the market, there seem to be fewer smaller flats (up to 750sf) , and not many large ones.
There are only about 10,000 new flats coming on the market in the next 6 months (down from a more normal
20,000 flats), and so demand for big luxury flats may stay tight. Property entrepreneusr that are good at combining
flats, especially in hot markets like HK island, may have a real opportunity.
(from GEI thread)
Second Big Tenant for ICC
Credit Suisse is taking the top 10 floors (300,000 sf- 40% more than its existing space.)
With a move-in date of 2011.
JP Morgan, CLSA, and Deutsche bank are also reported to be in talks with owner, Sung Hung Kai Properties.
The ICC Tower is expected to be completed in 2010, and there has apparently been a price rise.
But not everyone is happy.
"The general feedback in the office is not really good," said one Credit Suisee staff member.
"Travel times are longer..."
((Well that rather depends on where you live!
Sure, if the wife and kids are set up in mid-levels on HK island, it will be longer.
New hires will be much more likely to look at West Kowloon, and places like Discovery bay,
and even Tung Chung.... Leaving that crusty old banker safe to retire on mid-levels after he
quits, retires, or receives a redundancy package.)
= =
The New gateway to China: Kowloon Central and the ICC
International Commerce Centre (ICC) at Kowloon Central (Union Square):
Will be tallest tower in Hong Kong, third tallest in the world
Sun Hung Kai Properties, also oversaw the building of the IFC in Central
A new high speed train will link the Kowloon central station to Guangzhou,
China's third largest city, through a 45 minute train ride
Other notes from various articles:
+ Shortage of prime office space in central has driven up rents there by 20%.
+ Office space vacancies in Central are said to be down to below 2%
+ Rents in central were up 6.7 % in the latest quarter, and 21% in teh last year
+ Spot rents at IFC and Exchange Square hit hk$176 and HK$120 psf, respectively
+ ICC will be raising rents 10% from current levels of $42 psf
+ The space taken by CS is enough to house 2,000 staff
+ With 110 floors (?) at ICC, that suggests room for 22,000 staff.
+ That is alot of new housing deamnd for Kowloon, which only has 4,000 new flats
.. to be launched in the next 6 months or so.
Trading Places
ICC is challenging the pricey Central district as HK's office hot spot
District==== Office area : Rental level : Vacancy
Central........ .. 14.6mn .. : HK$111 psf : 1.00%
Sheung Wan. .... 3.8mn .. : HK$ 51 psf : 3.70%
Admiralty..... .... 4.5mn .. : HK$ 66 psf : 1.90%
Wan Chai..... .. 11.0mn .. : HK$ 40 psf : 1.50%
Tsin Sha Tsui .. 10.9mn .. : HK$ 34 psf : 5.00%
ICC project... ... 2.5mn .. : hk$ 50 psf : ?? 1/3?
(Data as of November 2007- from WSJ article)
/link: GEI's thread on Kowloon
Second Big Tenant for ICC
Credit Suisse is taking the top 10 floors (300,000 sf- 40% more than its existing space.)
With a move-in date of 2011.
JP Morgan, CLSA, and Deutsche bank are also reported to be in talks with owner, Sung Hung Kai Properties.
The ICC Tower is expected to be completed in 2010, and there has apparently been a price rise.
But not everyone is happy.
"The general feedback in the office is not really good," said one Credit Suisee staff member.
"Travel times are longer..."
((Well that rather depends on where you live!
Sure, if the wife and kids are set up in mid-levels on HK island, it will be longer.
New hires will be much more likely to look at West Kowloon, and places like Discovery bay,
and even Tung Chung.... Leaving that crusty old banker safe to retire on mid-levels after he
quits, retires, or receives a redundancy package.)
= =
The New gateway to China: Kowloon Central and the ICC
International Commerce Centre (ICC) at Kowloon Central (Union Square):
Will be tallest tower in Hong Kong, third tallest in the world
Sun Hung Kai Properties, also oversaw the building of the IFC in Central
A new high speed train will link the Kowloon central station to Guangzhou,
China's third largest city, through a 45 minute train ride
Other notes from various articles:
+ Shortage of prime office space in central has driven up rents there by 20%.
+ Office space vacancies in Central are said to be down to below 2%
+ Rents in central were up 6.7 % in the latest quarter, and 21% in teh last year
+ Spot rents at IFC and Exchange Square hit hk$176 and HK$120 psf, respectively
+ ICC will be raising rents 10% from current levels of $42 psf
+ The space taken by CS is enough to house 2,000 staff
+ With 110 floors (?) at ICC, that suggests room for 22,000 staff.
+ That is alot of new housing deamnd for Kowloon, which only has 4,000 new flats
.. to be launched in the next 6 months or so.
Trading Places
ICC is challenging the pricey Central district as HK's office hot spot
District==== Office area : Rental level : Vacancy
Central........ .. 14.6mn .. : HK$111 psf : 1.00%
Sheung Wan. .... 3.8mn .. : HK$ 51 psf : 3.70%
Admiralty..... .... 4.5mn .. : HK$ 66 psf : 1.90%
Wan Chai..... .. 11.0mn .. : HK$ 40 psf : 1.50%
Tsin Sha Tsui .. 10.9mn .. : HK$ 34 psf : 5.00%
ICC project... ... 2.5mn .. : hk$ 50 psf : ?? 1/3?
(Data as of November 2007- from WSJ article)
/link: GEI's thread on Kowloon
A BOAT for BD's New Yi Pak Bay
All aboard for DBay ... No Mutiny on this Bounty
Victor Cheung / Thursday, December 06, 2007
Discovery Bay has always been a development with character. And it doesn't come any more quirky than this - while other developers are busy fighting over prime land sites, Discovery Bay developer HKR International (0480) is bringing in a ship to add color to the resort area.
Vice chairman Victor Cha Mou- zing's passion for the sea was apparent when he introduced his 30-year-old Bounty, a replica of the 42-meter-tall HMAV Bounty, which was built in 1784.
The original Bounty was famous for a mutiny in 1789. The replica was used in the filming of the 1984 movie The Bounty, which starred Anthony Hopkins and Mel Gibson and was based on the mutiny.
The replica also has a Chinese name, Chi Ming, in memory of HKR International founder Cha Chi-ming, who passed away at 94 this year.
After a welcome ceremony in Victoria Harbour, the Bounty will reside near Yi Pak Bay, where the forthcoming phases of Discovery Bay development will take place.
/more: http://www.thestandard.hk/news_detail.asp?...071206&fc=7
All aboard for DBay ... No Mutiny on this Bounty
Victor Cheung / Thursday, December 06, 2007
Discovery Bay has always been a development with character. And it doesn't come any more quirky than this - while other developers are busy fighting over prime land sites, Discovery Bay developer HKR International (0480) is bringing in a ship to add color to the resort area.
Vice chairman Victor Cha Mou- zing's passion for the sea was apparent when he introduced his 30-year-old Bounty, a replica of the 42-meter-tall HMAV Bounty, which was built in 1784.
The original Bounty was famous for a mutiny in 1789. The replica was used in the filming of the 1984 movie The Bounty, which starred Anthony Hopkins and Mel Gibson and was based on the mutiny.
The replica also has a Chinese name, Chi Ming, in memory of HKR International founder Cha Chi-ming, who passed away at 94 this year.
After a welcome ceremony in Victoria Harbour, the Bounty will reside near Yi Pak Bay, where the forthcoming phases of Discovery Bay development will take place.
/more: http://www.thestandard.hk/news_detail.asp?...071206&fc=7
QUOTE (DrBubb @ Dec 9 2007, 05:03 AM)
A BOAT for BD's New Yi Pak Bay
All aboard for DBay ... No Mutiny on this Bounty
Victor Cheung / Thursday, December 06, 2007
Discovery Bay has always been a development with character. And it doesn't come any more quirky than this - while other developers are busy fighting over prime land sites, Discovery Bay developer HKR International (0480) is bringing in a ship to add color to the resort area.
Vice chairman Victor Cha Mou- zing's passion for the sea was apparent when he introduced his 30-year-old Bounty, a replica of the 42-meter-tall HMAV Bounty, which was built in 1784.
The original Bounty was famous for a mutiny in 1789. The replica was used in the filming of the 1984 movie The Bounty, which starred Anthony Hopkins and Mel Gibson and was based on the mutiny.
The replica also has a Chinese name, Chi Ming, in memory of HKR International founder Cha Chi-ming, who passed away at 94 this year.
After a welcome ceremony in Victoria Harbour, the Bounty will reside near Yi Pak Bay, where the forthcoming phases of Discovery Bay development will take place.
/more: http://www.thestandard.hk/news_detail.asp?...071206&fc=7
All aboard for DBay ... No Mutiny on this Bounty
Victor Cheung / Thursday, December 06, 2007
Discovery Bay has always been a development with character. And it doesn't come any more quirky than this - while other developers are busy fighting over prime land sites, Discovery Bay developer HKR International (0480) is bringing in a ship to add color to the resort area.
Vice chairman Victor Cha Mou- zing's passion for the sea was apparent when he introduced his 30-year-old Bounty, a replica of the 42-meter-tall HMAV Bounty, which was built in 1784.
The original Bounty was famous for a mutiny in 1789. The replica was used in the filming of the 1984 movie The Bounty, which starred Anthony Hopkins and Mel Gibson and was based on the mutiny.
The replica also has a Chinese name, Chi Ming, in memory of HKR International founder Cha Chi-ming, who passed away at 94 this year.
After a welcome ceremony in Victoria Harbour, the Bounty will reside near Yi Pak Bay, where the forthcoming phases of Discovery Bay development will take place.
/more: http://www.thestandard.hk/news_detail.asp?...071206&fc=7
I like the idea of owning property in Hong Kong but the apartments that I have seen are so small. They are more like horse boxes than apartments. Having said that they are still a good investment because of the shortage of living space in the cities, so rental yield will always be high, hopefully!
http://www.hiday.net/news.html?newsid=182
( From the MoneyWeek Mention thread ):
Hmmm. Maybe.
But the developers are now complaining that the HK government has not put enough land up for auction sale to be developed. And the result is that only about 10,000 new properties will come up for sale in the next year. The "normal" new supply is twice that, as I posted on GEI yesterday:
= =QUOTE= = =
HK's APPROACHING PROPERTY SQUEEZE - from today's SCMP, pg.P1:
HK to face shortfall in flats amid rising prices
One veteran analyst warned of a possible re-run of the property bubble...
Limited land releases in the past few years meant home supply in the pipeline for the next three years was down to just 12,000 units per annum, warned BS joint head of Asia property research Eric Wong.
This compares with up to 20,000 to 25,000 new housing units coming onstream every year over the past decade.
"If the government does not review its land supply policy, we are headed for a severe shortage of supply," he said.
...To avoid that, the government should lower its reserve privce on application lists of properties available for redevelopment, he said
((Remember: this supply squeeze is developing at a time when the link between the HK$ and the US$, and the Fed's efforts to ease a liquidity shortage are combining to force HK$ interest rates lower along with US rates.))
= =UNQUOTE= = =
BTW, I what am trying to do (in GEI's property section) is to develop an an intelligent discussion about the real technical and fundamental factors that drive successful property investment. We never saw that on Singing Pig, Motley Fool, or any of the bullish websites. It was mostly spin and cheerleading. I hope to get out of the HK market well before the peak, when the crazy lending, and crazy pricing come into the market.
I will be capture the big-and-safer part of the move, and exit before the peak PROVIDED I can find another cheap and bottoming market to move into (like gold and HK property were when I was buying in.) This is the essence of cyclically driven investing
QUOTE (expatowner @ Dec 13 2007, 03:33 AM)
Yes.
Basically its a cartel run by the huge HK property developers who all have close connections to HK Government and Beijing.
Basically its a cartel run by the huge HK property developers who all have close connections to HK Government and Beijing.
Hmmm. Maybe.
But the developers are now complaining that the HK government has not put enough land up for auction sale to be developed. And the result is that only about 10,000 new properties will come up for sale in the next year. The "normal" new supply is twice that, as I posted on GEI yesterday:
= =QUOTE= = =
HK's APPROACHING PROPERTY SQUEEZE - from today's SCMP, pg.P1:
HK to face shortfall in flats amid rising prices
One veteran analyst warned of a possible re-run of the property bubble...
Limited land releases in the past few years meant home supply in the pipeline for the next three years was down to just 12,000 units per annum, warned BS joint head of Asia property research Eric Wong.
This compares with up to 20,000 to 25,000 new housing units coming onstream every year over the past decade.
"If the government does not review its land supply policy, we are headed for a severe shortage of supply," he said.
...To avoid that, the government should lower its reserve privce on application lists of properties available for redevelopment, he said
((Remember: this supply squeeze is developing at a time when the link between the HK$ and the US$, and the Fed's efforts to ease a liquidity shortage are combining to force HK$ interest rates lower along with US rates.))
= =UNQUOTE= = =
BTW, I what am trying to do (in GEI's property section) is to develop an an intelligent discussion about the real technical and fundamental factors that drive successful property investment. We never saw that on Singing Pig, Motley Fool, or any of the bullish websites. It was mostly spin and cheerleading. I hope to get out of the HK market well before the peak, when the crazy lending, and crazy pricing come into the market.
I will be capture the big-and-safer part of the move, and exit before the peak PROVIDED I can find another cheap and bottoming market to move into (like gold and HK property were when I was buying in.) This is the essence of cyclically driven investing
QUOTE (DrBubb @ Dec 13 2007, 06:05 AM)
( From the MoneyWeek Mention thread ):
Hmmm. Maybe.
But the developers are now complaining that the HK government has not put enough land up for auction sale to be developed. And the result is that only about 10,000 new properties will come up for sale in the next year. The "normal" new supply is twice that, as I posted on GEI yesterday:
= =QUOTE= = =
HK's APPROACHING PROPERTY SQUEEZE - from today's SCMP, pg.P1:
HK to face shortfall in flats amid rising prices
One veteran analyst warned of a possible re-run of the property bubble...
Limited land releases in the past few years meant home supply in the pipeline for the next three years was down to just 12,000 units per annum, warned BS joint head of Asia property research Eric Wong.
This compares with up to 20,000 to 25,000 new housing units coming onstream every year over the past decade.
"If the government does not review its land supply policy, we are headed for a severe shortage of supply," he said.
...To avoid that, the government should lower its reserve privce on application lists of properties available for redevelopment, he said
((Remember: this supply squeeze is developing at a time when the link between the HK$ and the US$, and the Fed's efforts to ease a liquidity shortage are combining to force HK$ interest rates lower along with US rates.))
= =UNQUOTE= = =
BTW, I what am trying to do (in GEI's property section) is to develop an an intelligent discussion about the real technical and fundamental factors that drive successful property investment. We never saw that on Singing Pig, Motley Fool, or any of the bullish websites. It was mostly spin and cheerleading. I hope to get out of the HK market well before the peak, when the crazy lending, and crazy pricing come into the market.
I will be capture the big-and-safer part of the move, and exit before the peak PROVIDED I can find another cheap and bottoming market to move into (like gold and HK property were when I was buying in.) This is the essence of cyclically driven investing
Hmmm. Maybe.
But the developers are now complaining that the HK government has not put enough land up for auction sale to be developed. And the result is that only about 10,000 new properties will come up for sale in the next year. The "normal" new supply is twice that, as I posted on GEI yesterday:
= =QUOTE= = =
HK's APPROACHING PROPERTY SQUEEZE - from today's SCMP, pg.P1:
HK to face shortfall in flats amid rising prices
One veteran analyst warned of a possible re-run of the property bubble...
Limited land releases in the past few years meant home supply in the pipeline for the next three years was down to just 12,000 units per annum, warned BS joint head of Asia property research Eric Wong.
This compares with up to 20,000 to 25,000 new housing units coming onstream every year over the past decade.
"If the government does not review its land supply policy, we are headed for a severe shortage of supply," he said.
...To avoid that, the government should lower its reserve privce on application lists of properties available for redevelopment, he said
((Remember: this supply squeeze is developing at a time when the link between the HK$ and the US$, and the Fed's efforts to ease a liquidity shortage are combining to force HK$ interest rates lower along with US rates.))
= =UNQUOTE= = =
BTW, I what am trying to do (in GEI's property section) is to develop an an intelligent discussion about the real technical and fundamental factors that drive successful property investment. We never saw that on Singing Pig, Motley Fool, or any of the bullish websites. It was mostly spin and cheerleading. I hope to get out of the HK market well before the peak, when the crazy lending, and crazy pricing come into the market.
I will be capture the big-and-safer part of the move, and exit before the peak PROVIDED I can find another cheap and bottoming market to move into (like gold and HK property were when I was buying in.) This is the essence of cyclically driven investing
Dr Bubb,
I believe your overview of the HK property market tends to be on the ball and as an investment is pretty well much a no brainer atm. As a poster on asiaexpat says "the race is on".
However, with the purpose of helpful and constuctive advise I would like to offer my opinion on regional differentials.
1) South Side (Stanley etc): Short supply, already priced very high, will remain strong but any opportunities to make short term strong returns may already be missed. Stable market as will always be attractive/ desirable.
2) Island/ mid levels: Most obvious 'investement location'- still some scope for capital growth, particuarly in renovation jobs. Risk relatively low, yield still healthy in some estates, safe bet for medium term. Can be costly.
3) Kowloon: Strong supply, strong capita growth in recent years, perceived as having more 'potential' , slightly riskier, highly segmented market between luxury,mass market.
4) West New Territories: Still 'value' to be had, yields lower, hardest hit by downturn, slowest to recover, potential although greater risk. Development like poss. min. wage, construction projects, links to mainland offer medium - longer term growth potential.
5) Eastern new territories: Strong growth, seen as better 'environment', Some strong yields in areas. Attractive to expats, less so to locals. less risk associated with more scarce properties. Some areas have poor communication.
These are just some passing thoughts but I think it is important to segment the market due to some quite hefty difference in growth between regions. I appreciate your views on the wider market. Also, have you ever been inviolved in property development? I do believe that the present environment is a golden opportunity to add value for re-sale. www.landed.hk apparently offers some helpful avise. Finally, I believe that village houses offer significant opportunities, which I think are sometimes overlooked. The stigma of the past is diminishing, popular amongst expats and offer a genuinely better living environment if considered. They also tend to be rather less volatile in price due to funding issues ie 70% downpayment requirments.
Any way will follow up.
QUOTE (desertorchid @ Dec 23 2007, 07:14 AM)
Dr Bubb,
I believe your overview of the HK property market tends to be on the ball and as an investment is pretty well much a no brainer atm. As a poster on asiaexpat says "the race is on".
However, with the purpose of helpful and constuctive advise I would like to offer my opinion on regional differentials.
. . .
I believe your overview of the HK property market tends to be on the ball and as an investment is pretty well much a no brainer atm. As a poster on asiaexpat says "the race is on".
However, with the purpose of helpful and constuctive advise I would like to offer my opinion on regional differentials.
. . .
Thanks for those comments. Interesting.
(Please feel free to cut-and-paste to GEI, if you are interested in contributing to the debate there.)
I think you may be under-estimating the impact of 2.3 million sf of new office space being added by
the ICC at Kowloon Central. That's 22,000 new jobs, and they start moving in by mid-2008.
This will help grow property values along the Tung Chung MTR line.
Once the live there, they can commute 20-30 minutes (or more) to mid-levels where they
buy property at hk$10,000 - 12,000 psf, or they can commute 23 minutes to Tung Chung,
where they pay under hk$4,000 psf. That's a big savings, and the quality in TC is not bad.
I just bought my 6th flat in TC, and also own one at long Beach near Olympic.
Most expensive flats? Not HK, say SCMP
City
London (prime) $24,250 per sm / for 120 sm in City centre
New York........ $15,933
Moscow........... $15,531
London (other). $15,202
Paris............... $13,826
HONG KONG.... $12,599
Tokyo............. $11,870
Singapore....... $11,800
Mumbai........... $10,922
Barcelona........ $ 9,871
Geneva........... $ 7,534
...
Sydney........... $ 7,085
Toronto........... $ 4,737
Shanghai......... $ 3,318
Berlin.............. $ 2,464
Sofia, Bulgaria. $ 2,032
Manila............. $ 1,969
Kuala Lumpur.. $ 1,400
Jo'burg, SA...... $ 1,376
Jakarta............ $ 1,068
HK Boasts Asia's most costly flats
Average price is 6.14pc higehr than Japan, although per capita GNP is 23pc lower
"You can buy the world's second cheapest BigMac in Hong Kong, but a 120 sm flat in the city centre will cost you more than a similar-sized flat anywhere in asia."
+ BigMac in mainland china costs US$1.45, vs. US$1.54 in HK
+ research by CR Richard ellis shows 9 of the 10 most expensive residences in asia are located in HK
+ Property prices in Hk rose 11.25pc last year, according to the same source
City
London (prime) $24,250 per sm / for 120 sm in City centre
New York........ $15,933
Moscow........... $15,531
London (other). $15,202
Paris............... $13,826
HONG KONG.... $12,599
Tokyo............. $11,870
Singapore....... $11,800
Mumbai........... $10,922
Barcelona........ $ 9,871
Geneva........... $ 7,534
...
Sydney........... $ 7,085
Toronto........... $ 4,737
Shanghai......... $ 3,318
Berlin.............. $ 2,464
Sofia, Bulgaria. $ 2,032
Manila............. $ 1,969
Kuala Lumpur.. $ 1,400
Jo'burg, SA...... $ 1,376
Jakarta............ $ 1,068
HK Boasts Asia's most costly flats
Average price is 6.14pc higehr than Japan, although per capita GNP is 23pc lower
"You can buy the world's second cheapest BigMac in Hong Kong, but a 120 sm flat in the city centre will cost you more than a similar-sized flat anywhere in asia."
+ BigMac in mainland china costs US$1.45, vs. US$1.54 in HK
+ research by CR Richard ellis shows 9 of the 10 most expensive residences in asia are located in HK
+ Property prices in Hk rose 11.25pc last year, according to the same source
Today from AMEInfo.com
US rate cuts to boost house prices in Dubai, Abu Dhabi and Hong Kong
The US has axed interest rates to help its collapsing stock and housing markets. On the other side of the world, fixed-peg exchange rate regimes mean that wholly inappropriate low interest rates are now being applied to the booming Gulf economies and in Hong Kong. House price inflation is inevitable.
Hong Kong residents are perhaps more used to playing their property market than people living in the Gulf, whose freedom to buy has only emerged from relatively recent market liberalisation.
They have therefore been quicker to recognise what lower interest rates mean for real estate and mortgage applications are up by 50 per cent; and to be fair the Hong Kong banks have also been much quicker to adjust mortgage products to take advantage of low interest rates.
House price inflation
But lower finance costs ripple across the whole property development chain from land prices right through to secondary sales. If it is cheaper to finance development then profits are bigger. If home finance costs are falling, and look likely to fall further, then more buyers will enter the market.
It is an upward price spiral or house price inflation that will result. Tight supply conditions obviously help to exacerbate this market driver, and completed property in cities like Hong Kong, Dubai and Abu Dhabi is in painfully short supply.
A cursory check of the website
albabworld.com reveals just three villas listed in The Meadows, for example, compared with 20 a few months ago; and just two one-bedroom apartments in The Greens. It is the same in less popular Dubai locations.
At the same time the exit of local investors from the stock market after the extreme volatility of last week will likely produce a new wave of property investors. This phenomenon happened when the stock market crashed in 2006, and is simply a function of money looking for yield.
Rental yields are still very good in Dubai, particularly when compared with interest on cash deposits after the interest rate cuts of last week which the UAE central bank immediately passed on to local savers.
Finding yield
The smart money will therefore head into property, driving prices higher and yields down to something closer to the cost of finance, or interest rates.
It was the slashing of interest rates in the US after the bursting of the dot-com bubble in 2000-1 that sent the US housing market into a bubble. Now that bubble has burst and lower US rates are needed to keep property owners their afloat.
This time it will be other isolated pockets of real estate around the world that see their prices inflated by low interest rates. And given the determination of the authorities in Hong Kong and the UAE to maintain the dollar peg at almost any cost, this outcome has an air of inevitability about it.
For local residents in these countries the buying opportunity is now and those contemplating buying a villa today may find that they can only afford a small flat if they wait until tomorrow.
US rate cuts to boost house prices in Dubai, Abu Dhabi and Hong Kong
The US has axed interest rates to help its collapsing stock and housing markets. On the other side of the world, fixed-peg exchange rate regimes mean that wholly inappropriate low interest rates are now being applied to the booming Gulf economies and in Hong Kong. House price inflation is inevitable.
Hong Kong residents are perhaps more used to playing their property market than people living in the Gulf, whose freedom to buy has only emerged from relatively recent market liberalisation.
They have therefore been quicker to recognise what lower interest rates mean for real estate and mortgage applications are up by 50 per cent; and to be fair the Hong Kong banks have also been much quicker to adjust mortgage products to take advantage of low interest rates.
House price inflation
But lower finance costs ripple across the whole property development chain from land prices right through to secondary sales. If it is cheaper to finance development then profits are bigger. If home finance costs are falling, and look likely to fall further, then more buyers will enter the market.
It is an upward price spiral or house price inflation that will result. Tight supply conditions obviously help to exacerbate this market driver, and completed property in cities like Hong Kong, Dubai and Abu Dhabi is in painfully short supply.
A cursory check of the website
albabworld.com reveals just three villas listed in The Meadows, for example, compared with 20 a few months ago; and just two one-bedroom apartments in The Greens. It is the same in less popular Dubai locations.
At the same time the exit of local investors from the stock market after the extreme volatility of last week will likely produce a new wave of property investors. This phenomenon happened when the stock market crashed in 2006, and is simply a function of money looking for yield.
Rental yields are still very good in Dubai, particularly when compared with interest on cash deposits after the interest rate cuts of last week which the UAE central bank immediately passed on to local savers.
Finding yield
The smart money will therefore head into property, driving prices higher and yields down to something closer to the cost of finance, or interest rates.
It was the slashing of interest rates in the US after the bursting of the dot-com bubble in 2000-1 that sent the US housing market into a bubble. Now that bubble has burst and lower US rates are needed to keep property owners their afloat.
This time it will be other isolated pockets of real estate around the world that see their prices inflated by low interest rates. And given the determination of the authorities in Hong Kong and the UAE to maintain the dollar peg at almost any cost, this outcome has an air of inevitability about it.
For local residents in these countries the buying opportunity is now and those contemplating buying a villa today may find that they can only afford a small flat if they wait until tomorrow.
QUOTE (Ferrari430 @ Jan 27 2008, 05:09 PM)
Today from AMEInfo.com
US rate cuts to boost house prices in Dubai, Abu Dhabi and Hong Kong
The US has axed interest rates to help its collapsing stock and housing markets. On the other side of the world, fixed-peg exchange rate regimes mean that wholly inappropriate low interest rates are now being applied to the booming Gulf economies and in Hong Kong. House price inflation is inevitable.
Hong Kong residents are perhaps more used to playing their property market than people living in the Gulf, whose freedom to buy has only emerged from relatively recent market liberalisation.
They have therefore been quicker to recognise what lower interest rates mean for real estate and mortgage applications are up by 50 per cent; and to be fair the Hong Kong banks have also been much quicker to adjust mortgage products to take advantage of low interest rates.
House price inflation
But lower finance costs ripple across the whole property development chain from land prices right through to secondary sales. If it is cheaper to finance development then profits are bigger. If home finance costs are falling, and look likely to fall further, then more buyers will enter the market.
It is an upward price spiral or house price inflation that will result. Tight supply conditions obviously help to exacerbate this market driver, and completed property in cities like Hong Kong, Dubai and Abu Dhabi is in painfully short supply.
A cursory check of the website
albabworld.com reveals just three villas listed in The Meadows, for example, compared with 20 a few months ago; and just two one-bedroom apartments in The Greens. It is the same in less popular Dubai locations.
At the same time the exit of local investors from the stock market after the extreme volatility of last week will likely produce a new wave of property investors. This phenomenon happened when the stock market crashed in 2006, and is simply a function of money looking for yield.
Rental yields are still very good in Dubai, particularly when compared with interest on cash deposits after the interest rate cuts of last week which the UAE central bank immediately passed on to local savers.
Finding yield
The smart money will therefore head into property, driving prices higher and yields down to something closer to the cost of finance, or interest rates.
It was the slashing of interest rates in the US after the bursting of the dot-com bubble in 2000-1 that sent the US housing market into a bubble. Now that bubble has burst and lower US rates are needed to keep property owners their afloat.
This time it will be other isolated pockets of real estate around the world that see their prices inflated by low interest rates. And given the determination of the authorities in Hong Kong and the UAE to maintain the dollar peg at almost any cost, this outcome has an air of inevitability about it.
For local residents in these countries the buying opportunity is now and those contemplating buying a villa today may find that they can only afford a small flat if they wait until tomorrow.
US rate cuts to boost house prices in Dubai, Abu Dhabi and Hong Kong
The US has axed interest rates to help its collapsing stock and housing markets. On the other side of the world, fixed-peg exchange rate regimes mean that wholly inappropriate low interest rates are now being applied to the booming Gulf economies and in Hong Kong. House price inflation is inevitable.
Hong Kong residents are perhaps more used to playing their property market than people living in the Gulf, whose freedom to buy has only emerged from relatively recent market liberalisation.
They have therefore been quicker to recognise what lower interest rates mean for real estate and mortgage applications are up by 50 per cent; and to be fair the Hong Kong banks have also been much quicker to adjust mortgage products to take advantage of low interest rates.
House price inflation
But lower finance costs ripple across the whole property development chain from land prices right through to secondary sales. If it is cheaper to finance development then profits are bigger. If home finance costs are falling, and look likely to fall further, then more buyers will enter the market.
It is an upward price spiral or house price inflation that will result. Tight supply conditions obviously help to exacerbate this market driver, and completed property in cities like Hong Kong, Dubai and Abu Dhabi is in painfully short supply.
A cursory check of the website
albabworld.com reveals just three villas listed in The Meadows, for example, compared with 20 a few months ago; and just two one-bedroom apartments in The Greens. It is the same in less popular Dubai locations.
At the same time the exit of local investors from the stock market after the extreme volatility of last week will likely produce a new wave of property investors. This phenomenon happened when the stock market crashed in 2006, and is simply a function of money looking for yield.
Rental yields are still very good in Dubai, particularly when compared with interest on cash deposits after the interest rate cuts of last week which the UAE central bank immediately passed on to local savers.
Finding yield
The smart money will therefore head into property, driving prices higher and yields down to something closer to the cost of finance, or interest rates.
It was the slashing of interest rates in the US after the bursting of the dot-com bubble in 2000-1 that sent the US housing market into a bubble. Now that bubble has burst and lower US rates are needed to keep property owners their afloat.
This time it will be other isolated pockets of real estate around the world that see their prices inflated by low interest rates. And given the determination of the authorities in Hong Kong and the UAE to maintain the dollar peg at almost any cost, this outcome has an air of inevitability about it.
For local residents in these countries the buying opportunity is now and those contemplating buying a villa today may find that they can only afford a small flat if they wait until tomorrow.
Your right the time to buy in certain parts of the globe like china; Germany; Bulgaria etc is now. In these countries the interest rates are low. Having said that it might take as long as 15 years before these properties achieve any real value http://www.hiday.net/news.html?newsid=194
MASS IS BEST - so says Gordon Tse in today's SCMP
(And- Surprise!- Tung Chung is one of his top picks.)
"New home completions have hit a historic low, and real mortgage rates have fallen below zero...
More importantly, rents are rising fast. Last year, rents for ordinary flats rose 20 per cent,
lifting yields of mass residential units above 5.1 per cent."
He compares that with the Luxury sector, where prices are up 135.5 percent, and yields
are down from 5 per cent to 3.4 per cent. (How much are luxury rents going to rise in a time
of global recession? - my question.)
OTHER POINTS made by Gordon Tse, of Midland Reality:
+ As to location, Tsing Yi, Tung Chung, and northwest New territories are our top picks.
+ The main driving force for the home market in Tung Chung and Tsing Yi is urbanisation.
The completion of the airport railway and Tung chung lines has shortenbed the commuting
time and made these areas more attractive. For instance, an MTR ride from Central to
TC is only 14 minutes longer than that to Heng Fa Chuen. (An even closer to ICC !)
+ But despite improvements, average prices in TC are still 56 percent below Heng Fa Chuen.
This huge price diffferential is because more than 10,000 units were launched in TC in the
past 10 years. However, supply is no longer a problem, because only 580 units (the Midrises)
are still available for sale in TC.
+ In a negative real interest rate environment, owners will consider upgrading, and so demand
for 3BR properties is expected to rise.
+ In the NW NT, the proximity to Shenzhen should be a plus, given the ongoing boom there
+ With the fall in rates, and rising rentals, 40 per cent of the most popular mass residential
projects are cheaper to buy than to rent.
(And- Surprise!- Tung Chung is one of his top picks.)
"New home completions have hit a historic low, and real mortgage rates have fallen below zero...
More importantly, rents are rising fast. Last year, rents for ordinary flats rose 20 per cent,
lifting yields of mass residential units above 5.1 per cent."
He compares that with the Luxury sector, where prices are up 135.5 percent, and yields
are down from 5 per cent to 3.4 per cent. (How much are luxury rents going to rise in a time
of global recession? - my question.)
OTHER POINTS made by Gordon Tse, of Midland Reality:
+ As to location, Tsing Yi, Tung Chung, and northwest New territories are our top picks.
+ The main driving force for the home market in Tung Chung and Tsing Yi is urbanisation.
The completion of the airport railway and Tung chung lines has shortenbed the commuting
time and made these areas more attractive. For instance, an MTR ride from Central to
TC is only 14 minutes longer than that to Heng Fa Chuen. (An even closer to ICC !)
+ But despite improvements, average prices in TC are still 56 percent below Heng Fa Chuen.
This huge price diffferential is because more than 10,000 units were launched in TC in the
past 10 years. However, supply is no longer a problem, because only 580 units (the Midrises)
are still available for sale in TC.
+ In a negative real interest rate environment, owners will consider upgrading, and so demand
for 3BR properties is expected to rise.
+ In the NW NT, the proximity to Shenzhen should be a plus, given the ongoing boom there
+ With the fall in rates, and rising rentals, 40 per cent of the most popular mass residential
projects are cheaper to buy than to rent.
If I was to consider investing in Hong Kong my main concern would be the length of time which it is likely to maintain it's competitive edge (in business terms) over mainland China. My guess is that other areas of China (particularly Shanghai) will catch up quickly in terms of being preferred places to do business and Hong Kong may see a slow emigration of businesses to alternative locations in China. Still, I could be wrong.
Miainland China is a much better investment than Hong Kong. As most places are at best breaking even China economically is going from strength to strength. Having said that if you might be better buying an apartment in Hong Kong but if you were thinking of buying land it is best to opt for China in the long term say 7 or 8 years, maybe less see http://www.hiday.net/news.html?newsid=192
(I have summarised an article on the HK miracle economy thread, as follows):
INVEST YOUR SAVINGS TO BEAT INFLATION - implores Jake Van der Kamp
"Inflation risks are on the upside" - thanks to to the link to the weak US dollar.
"Inflation will not only drive up consumer prices, it will also force up the value of hk$ denominated investment assets. To protect yourself from rising consumer prices, put your investment savings in an asset that stands a excellent chance of rising even faster than consumer goods will - WHAT I HAVE IN MIND IS PROPERTY." (my caps)
+ The supply of new flats is very tight- annual completions are at a record low, relative to GDP,
... (10 flats per hk$1 billion of GDP. 25 years ago, the figure was 150 flats per hk$1 bn of GDP.)
+ The need for housing may be less than 25 years ago, but even after adjusted for price rises, there has been a huge decline in investment in new property
+ Prices have recovered most of the 70% drop since 1997, but only in the larger size properties. Middle-sized, and small flats, still remain far cheaper than the price peaks of 1997. JVDK believes that most of the appreciation in 2008-9, may come in the medium and smaller-sized flats (and presumeably in the mass market sector of the market.) Why? 10-15 years ago there was a much smaller differential in price, so the huge current gap is an anomoly. The samller flats are much more "affordable" to HK residents, whose income has been rising steadily, and will benefit from the current environment...
+ A weak dollar stirs the HK economy, while low interest rates (with lower still to come thanks to economic troubles in the US), should give a strong upwards momenrum to HK property prices.
"we are linked o a weak US dollar... a prescription for a boom in financial asset prices in an economy that is otherwise doing very well and would not ordinarily be a candidate for lower interest rates nd a weak currency. (Hong Kong) Property seems to be the best way of playing it at present."
INVEST YOUR SAVINGS TO BEAT INFLATION - implores Jake Van der Kamp
"Inflation risks are on the upside" - thanks to to the link to the weak US dollar.
"Inflation will not only drive up consumer prices, it will also force up the value of hk$ denominated investment assets. To protect yourself from rising consumer prices, put your investment savings in an asset that stands a excellent chance of rising even faster than consumer goods will - WHAT I HAVE IN MIND IS PROPERTY." (my caps)
+ The supply of new flats is very tight- annual completions are at a record low, relative to GDP,
... (10 flats per hk$1 billion of GDP. 25 years ago, the figure was 150 flats per hk$1 bn of GDP.)
+ The need for housing may be less than 25 years ago, but even after adjusted for price rises, there has been a huge decline in investment in new property
+ Prices have recovered most of the 70% drop since 1997, but only in the larger size properties. Middle-sized, and small flats, still remain far cheaper than the price peaks of 1997. JVDK believes that most of the appreciation in 2008-9, may come in the medium and smaller-sized flats (and presumeably in the mass market sector of the market.) Why? 10-15 years ago there was a much smaller differential in price, so the huge current gap is an anomoly. The samller flats are much more "affordable" to HK residents, whose income has been rising steadily, and will benefit from the current environment...
+ A weak dollar stirs the HK economy, while low interest rates (with lower still to come thanks to economic troubles in the US), should give a strong upwards momenrum to HK property prices.
"we are linked o a weak US dollar... a prescription for a boom in financial asset prices in an economy that is otherwise doing very well and would not ordinarily be a candidate for lower interest rates nd a weak currency. (Hong Kong) Property seems to be the best way of playing it at present."
A Greener Hong Kong - thru Renovation
Too many young buildings are demolished
===========================
One out of eight buildings pulled down in HK is not even 30 year old.
Of the 120 buildings approved for demolition thru November, at least 15 were under 15 years old. In 12006, the figure was similar: 12 of 136 buildings were under thre deacdes. Critics contend the rush to redevelop causes unnecessary construction waste, and disrution to the neighoborhood.
Why does this happen?:
- Land prices are so high, that any plot ratio improvements mean more money
- Regulations change, allowing devlopers to add floors
- Construction costs are typically about 1/8th of the land cost
- Govt. regulations do not favor refurbishment
Some want to change this last point, since:
+ HK's real estate industry currently adds 4,000 onnes of construction waste per day
+ Redevelopment can cut down on up to 80 percent of construction waste
+ A new building costs about double a well-furbished one,
+ Refurbishment takes about 1/3rd the time to complete
Too many young buildings are demolished
===========================
One out of eight buildings pulled down in HK is not even 30 year old.
Of the 120 buildings approved for demolition thru November, at least 15 were under 15 years old. In 12006, the figure was similar: 12 of 136 buildings were under thre deacdes. Critics contend the rush to redevelop causes unnecessary construction waste, and disrution to the neighoborhood.
Why does this happen?:
- Land prices are so high, that any plot ratio improvements mean more money
- Regulations change, allowing devlopers to add floors
- Construction costs are typically about 1/8th of the land cost
- Govt. regulations do not favor refurbishment
Some want to change this last point, since:
+ HK's real estate industry currently adds 4,000 onnes of construction waste per day
+ Redevelopment can cut down on up to 80 percent of construction waste
+ A new building costs about double a well-furbished one,
+ Refurbishment takes about 1/3rd the time to complete
CAPITOL RESERVATIONS
Cheung Kong has a new development, the Capitol, in the MTR Corp's new LOHAS Park development area in Tseung Kwan O. The project is being launched this week, at an expected selling price of HK$5,700 to $5,800 psf. The overall project will eventually comprise 50 towers (50 !) of 46 - 59 floors each, offering an eventual 21,500 units with a gross residential floor area of 17.36 million sf. (This must be one of the largest developments in HK ever!)
Phase one, the Capitol development from CK consists of five blocks of 2,096 units ranging in size from 683 sf to 1,116 sf, scheduled for completion by June of next year. CK plans to pre-sell the flats starting this week.
An article in today's SCMP quotes various Estate Agents, who have reservations about buying in the project:
+ Centaline says target prices are 21 percent higher than the average transaction price achieved by units at the nearby Metro Town in TKO, which was completed last year.
+ Demand in the primary market is mainly from investors (so you must ask: who will live there, and what sort of rents will they be willing to pay?)
+ With such a big project coming, there will be ample supply in the pipeline for the TKO district
+ Some dont like the Landfill south of the development. Owners in nearby Ocean Shores and Park Central have protested against the pollution from the landfill- there are odors from the landfill every June to September.
However, some think the historical pattern may be repeated: "From past experience, those who buy early should benefit from price appreciation - just like the large projects in Taikoo Shing, Mei Foo Sun Chuen, and Whampoa Garden." (all from many years ago)
= =
(The smart way to play, might be to buy nearby properties - away from the landfill- in the secondary market. Following is a Q&A also from "Ask the Experts" in today's SCMP):
Q:
I bought a flat at Oscar by the Sea in TKO for investment in 2006. It cost me HK$3.8 million. I received an offer for HK$4.12 million for my flat recently. CK plans to launch the Capitol in the area shortly. Transaction in the secondary market may drop significantly after the launch. I'm worried that I might have to wait a long time if I miss this offer. Do you think now is a good time to sell?
A:
Transactions in the secondary market will slow down when the new project is launched and it will last from two to three months. But you will benefit and sell your unit at a higher price if the Capitol records strong sales. I believe that you should wait for two months.
= =
(see MORE COMMENTS like this on GEI's HK Property thread)
Cheung Kong has a new development, the Capitol, in the MTR Corp's new LOHAS Park development area in Tseung Kwan O. The project is being launched this week, at an expected selling price of HK$5,700 to $5,800 psf. The overall project will eventually comprise 50 towers (50 !) of 46 - 59 floors each, offering an eventual 21,500 units with a gross residential floor area of 17.36 million sf. (This must be one of the largest developments in HK ever!)
Phase one, the Capitol development from CK consists of five blocks of 2,096 units ranging in size from 683 sf to 1,116 sf, scheduled for completion by June of next year. CK plans to pre-sell the flats starting this week.
An article in today's SCMP quotes various Estate Agents, who have reservations about buying in the project:
+ Centaline says target prices are 21 percent higher than the average transaction price achieved by units at the nearby Metro Town in TKO, which was completed last year.
+ Demand in the primary market is mainly from investors (so you must ask: who will live there, and what sort of rents will they be willing to pay?)
+ With such a big project coming, there will be ample supply in the pipeline for the TKO district
+ Some dont like the Landfill south of the development. Owners in nearby Ocean Shores and Park Central have protested against the pollution from the landfill- there are odors from the landfill every June to September.
However, some think the historical pattern may be repeated: "From past experience, those who buy early should benefit from price appreciation - just like the large projects in Taikoo Shing, Mei Foo Sun Chuen, and Whampoa Garden." (all from many years ago)
= =
(The smart way to play, might be to buy nearby properties - away from the landfill- in the secondary market. Following is a Q&A also from "Ask the Experts" in today's SCMP):
Q:
I bought a flat at Oscar by the Sea in TKO for investment in 2006. It cost me HK$3.8 million. I received an offer for HK$4.12 million for my flat recently. CK plans to launch the Capitol in the area shortly. Transaction in the secondary market may drop significantly after the launch. I'm worried that I might have to wait a long time if I miss this offer. Do you think now is a good time to sell?
A:
Transactions in the secondary market will slow down when the new project is launched and it will last from two to three months. But you will benefit and sell your unit at a higher price if the Capitol records strong sales. I believe that you should wait for two months.
= =
(see MORE COMMENTS like this on GEI's HK Property thread)
(From a thread on GEI ):
Okay. Superficially, my investing may seem similar to TTRTR. We are both long property.
But, I reckon there are a number of important differences:
+ I start from the notion that property is a cyclical sector, and I want to "catch the sweet spot", and be out before the peak. That doesnt mean that I won't get stuck in after the top (as TTRTR seems to), but at least I will be very alert for signs of a peak. I will be looking for another market to move into (the US?) before the top is in here. I have typically gotten out of cyclical moves "early": UK property in 2001 to move into gold, catching its low. And in the past year, I have been diversifying away from mining (which could still have years to go), to get into property here. TTRTR hasnt shown any cyclical nimbleness. He is a self-confessed "long term bull on property"- in denial of cycles.
+ The fundamentals underlying this boom are different than they were in the UK. Rents are rising fast in HK (up 10-15% per annum or more), while in the UK, rents seemed to be stagnant for years. Also rates are falling fast, driven lower by US cuts. At the peak in London, rates had been rising for many months. The Builders are a good bellwether here also. Their sharp moves up attracted me in. They ae now off their highs, but my reading of the charts is that their is yet another surge ahead for HK property developers. If tehy break down instead,I will redouble my alertness.
+ I regard TTRTR as a speculator who stumbled into property investing, following a societal bandwagon, driven by wildly aggressive lending by banks (like NRK.) He got carried away, and started believing EA hype. Of course, there are many investors here too, but most investors got burned by the 70% drop from 1997 to 2003, and that is within their recent memory. The result is more caution, especially amongst the banks, who ae reluctant to lend more than 70%. All of my loans were in the region of 65% - 70%, and with price appreciation my portfolio is now sitting at near 50% Loan to Value, with no MEW-ing, at least not yet.
+ I welcome bear arguments, especially those that are backed up by facts, and figures. I dont want to miss the turn, so bear arguments will help me stay alert, and not miss something. The possible scenario you point to: a surge up, followed by a sharp fall, is possible, and could be triggered by: a re-pegging of the HK dollar, or a turnaround in rates from a falling trend to a rising trend. Do people here see other ways that could happen?
Compare charts:
............. UK Property ........................................................... : ......... UK Builder: Taylor Wimpey (TW.L)
.
.
............. HK Property ........................................................... : ......... HK Developer: Henderson (HK:12)
.
.
Compare and contrast this comment from Midland Realty, with what you might get from UK estate agents:
"End-user demand on supply shortage and improved affordability
Pessimists have raised worries of a bubble burst with the local property market despite the presence of negative interest rates and other favourable factors. However, I would like to emphasise that the Hong Kong market has strong and sound fundamentals. There are three major supporting factors:
1. Hong Kong is a high savings society. The total personal savings with local banks are estimated at HK$6,000 billion.
2. The indebtedness of local families is low. The mortgage-to-income ratio has declined steadily to about 30%.
3. Land Registry records showed a low volume of confirmor-related transactions in 2007, indicating that just 1.6% of home purchases involved short-term speculators during the year.
An economic cycle has to go through a number of financial crises, big and small. During a market slump, average investors are often polarised into two major categories – the extreme pessimists prefer to hold cash on hand and on the defensive; the ultra-aggressive ones on the opposite camp are prepared to fight back hard to regain their lost ground. Hong Kong’s property market is characterised by a supply shortage, strong demand from end-users, low level of indebtedness and high savings rate. Buying into Hong Kong property assets appears to be a good bet."
/source: http://www.midland.com.hk/eng/market_views/080125.shtml
QUOTE (mxxxx @ Feb 21 2008, 10:09 PM)
I had to laugh at Dr Bubb describing his BTL activities in Hong Kong. Deary me, Dr Bubb, shades of Time To Raise The Rents!
Why is property rising so fast in HK? Might it not peak sharply and then decline leaving you with Albatross assets around your neck like Japan?
Why is property rising so fast in HK? Might it not peak sharply and then decline leaving you with Albatross assets around your neck like Japan?
Okay. Superficially, my investing may seem similar to TTRTR. We are both long property.
But, I reckon there are a number of important differences:
+ I start from the notion that property is a cyclical sector, and I want to "catch the sweet spot", and be out before the peak. That doesnt mean that I won't get stuck in after the top (as TTRTR seems to), but at least I will be very alert for signs of a peak. I will be looking for another market to move into (the US?) before the top is in here. I have typically gotten out of cyclical moves "early": UK property in 2001 to move into gold, catching its low. And in the past year, I have been diversifying away from mining (which could still have years to go), to get into property here. TTRTR hasnt shown any cyclical nimbleness. He is a self-confessed "long term bull on property"- in denial of cycles.
+ The fundamentals underlying this boom are different than they were in the UK. Rents are rising fast in HK (up 10-15% per annum or more), while in the UK, rents seemed to be stagnant for years. Also rates are falling fast, driven lower by US cuts. At the peak in London, rates had been rising for many months. The Builders are a good bellwether here also. Their sharp moves up attracted me in. They ae now off their highs, but my reading of the charts is that their is yet another surge ahead for HK property developers. If tehy break down instead,I will redouble my alertness.
+ I regard TTRTR as a speculator who stumbled into property investing, following a societal bandwagon, driven by wildly aggressive lending by banks (like NRK.) He got carried away, and started believing EA hype. Of course, there are many investors here too, but most investors got burned by the 70% drop from 1997 to 2003, and that is within their recent memory. The result is more caution, especially amongst the banks, who ae reluctant to lend more than 70%. All of my loans were in the region of 65% - 70%, and with price appreciation my portfolio is now sitting at near 50% Loan to Value, with no MEW-ing, at least not yet.
+ I welcome bear arguments, especially those that are backed up by facts, and figures. I dont want to miss the turn, so bear arguments will help me stay alert, and not miss something. The possible scenario you point to: a surge up, followed by a sharp fall, is possible, and could be triggered by: a re-pegging of the HK dollar, or a turnaround in rates from a falling trend to a rising trend. Do people here see other ways that could happen?
Compare charts:
............. UK Property ........................................................... : ......... UK Builder: Taylor Wimpey (TW.L)
............... HK Property ........................................................... : ......... HK Developer: Henderson (HK:12)
..Compare and contrast this comment from Midland Realty, with what you might get from UK estate agents:
"End-user demand on supply shortage and improved affordability
Pessimists have raised worries of a bubble burst with the local property market despite the presence of negative interest rates and other favourable factors. However, I would like to emphasise that the Hong Kong market has strong and sound fundamentals. There are three major supporting factors:
1. Hong Kong is a high savings society. The total personal savings with local banks are estimated at HK$6,000 billion.
2. The indebtedness of local families is low. The mortgage-to-income ratio has declined steadily to about 30%.
3. Land Registry records showed a low volume of confirmor-related transactions in 2007, indicating that just 1.6% of home purchases involved short-term speculators during the year.
An economic cycle has to go through a number of financial crises, big and small. During a market slump, average investors are often polarised into two major categories – the extreme pessimists prefer to hold cash on hand and on the defensive; the ultra-aggressive ones on the opposite camp are prepared to fight back hard to regain their lost ground. Hong Kong’s property market is characterised by a supply shortage, strong demand from end-users, low level of indebtedness and high savings rate. Buying into Hong Kong property assets appears to be a good bet."
/source: http://www.midland.com.hk/eng/market_views/080125.shtml
DEVELOPER WARNING SIGN?
===============
Cheung Kong has FALLEN from its yearly high of HK$159.50
HK:1 : 103.40 / Change: -3.70 / Percent Change: -3.45%
The Charts : weekly update : daily
Weekly-10years
Weekly-5years
...suggest that CK had better turn up soon (holding $100 support?) or a Bearish message may be flashed
CK is already below that uptrend line, as this CLOSE-UP
===============
Cheung Kong has FALLEN from its yearly high of HK$159.50
HK:1 : 103.40 / Change: -3.70 / Percent Change: -3.45%
The Charts : weekly update : daily
Weekly-10years
Weekly-5years
...suggest that CK had better turn up soon (holding $100 support?) or a Bearish message may be flashed
CK is already below that uptrend line, as this CLOSE-UP
QUOTE (john84 @ Feb 5 2008, 09:56 PM)
Miainland China is a much better investment than Hong Kong. As most places are at best breaking even China economically is going from strength to strength. Having said that if you might be better buying an apartment in Hong Kong but if you were thinking of buying land it is best to opt for China in the long term say 7 or 8 years, maybe less see http://www.hiday.net/news.html?newsid=192
You can't buy easily land in China as a foreigner. Even buying an apartment has many rules and regulations, so unless you live in China, or a Chinese in HK, forget it.
There are many currency restrictions and tax issues, repatriation of money/rent etc. Even big companies have difficulties buying in China, esp now as China is clamping on property appreciation.
I know some investors who managed to buy condo, but sold it due to the hassle. This does not mean it is a good market, but probably not yet. It is esp good due to RMB appreciation, but this is precisely why the govt is clamping down on this hot money.
Current indicators are not too good. Some markets have had price discounting, and volume has dropped. This is partly as part of the boom (up 50%+) has passed. Don't go in until govt is more willing for investors to go in.
QUOTE (ChauTauVillager @ Mar 10 2008, 01:03 PM)
You can't buy easily land in China as a foreigner. Even buying an apartment has many rules and regulations, so unless you live in China, or a Chinese in HK, forget it.
There are many currency restrictions and tax issues, repatriation of money/rent etc. Even big companies have difficulties buying in China, esp now as China is clamping on property appreciation.
There are many currency restrictions and tax issues, repatriation of money/rent etc. Even big companies have difficulties buying in China, esp now as China is clamping on property appreciation.
Even buying in HK is getting more difficult.
Banks here are tightening up, and they are really only happy to lend to those with HK-source income
And maybe that is good if it helps keep a bubble from developing here
MIXED SIGNALS - A pause "that refreshes" in the HK property market?
===========
(The press is slowly catching up with my distate for luxury buildings, and midlevels.)
SCMP's Property section seems to reflect opposing points of view:
1/ Nervous speculators cut sales prices in rush to exits - pg.1
"Investors fear a fallout in local home prices from worsening subprime prices in the United States"
When you read deeper, you will find the article has a few reports of people cutting prices by up to 10%, including mention that "Sun Hung Kai Properties sold sold some of the remaining units at Harbour Green in West Kowloon at between hk$6,200 and hk$9,500 psf". How many attractive units were left, I wonder? And "at harbour Place, hung hom, an investors recently sold a unit at a loss, according to an agent who refused toi be named"
This is worrying to some. but i dont think that Harbour Place was priced right for what it is: a refurbishment of a public housing project which featured small windows, and poor layouts, at a fat premium to nearby secondhand prices. Also, some investors are surely hit by stock market losses (from the falling HSE and China markets), andf may be finding it difficult to raise the needed finance. It is clear that stocks are on people's minds: "Mr Lai said overall home prices were UNLIKELY to fall as much as 30 percent in line with the fall in the Hang seng index."
The article includes this sentence, which puts "the pause" into perspective: "Many investors can still make a reasonable profit given that housing is still up 20 percent year to date."
= =
2/ Expatriates buying as Rents climb - pg.3
Falling mortgage costs boost growing trend to own homes in HK
A growing number of young middle income expats are being lured into buying units in mass residential properties or old apartment blocks after years of renting their homes. Helping to drive the trend areexpectations that rents may rise about 50percent, as leases fall due for renewal during the year.
Example: 747 sf at Fortress Gardens was hk$12,000 last year; but today you would have to pay hk$18- 20,000.
Upward pressure on rents, combined with falling rates, has made it attractive to buy. And even if they buy andprices fall, these expats seem likely to hold on for the long haul, given their exposureto rental increases if they do not own.
Mortgage loans approved in Hk in january 2008 jumped almost 30 percent to hk$29.6 bn, with hk$23.7 bn of that funding purchases in the secondary market. (Much of this was simply due to higher prices IMHO.)
Comments:
"My housing allowance now almost covers the monthly mortgage instalment," said Sybil Lee a Taiwanese air hostess that mopved to HK 13 years ago. She bought a 505sf 20-year old flat in Kennedy Town for hk$2.3 million. Her mointhly mortgage payment was only hk$7,000 as she took a loan for 30 percent (??) of the sales price. "I was fed up with renting so many years."
Another recent homeowner paid hk$3.4 million for a 1,000 sf flat in a 15-year old block on Hollywood Road. "I was vacillating between my rental flat and I needed a place to live. I figured that rising rents made it cheaper to buy." many expats (including pilots and air hostesses) are looking for flats to buy in the area. Most are end users rather than investors.)
Ross Jolliffe, who bought a property on Pok Fu lam for hk$6.3 million in April last year, is considering to sell it, and buy something larger. But he is waiting tos ee if luxury prices pull back with the US credit crisis. Asking prices for flats larger than 1,500 sf on Robinson Road were about hk$14 million, he noted. "I think property prices for bigger flats are crazy."
= =
...meantime the lead article:
Height Cap points to shift in Focus
Developers may turn to older buildings in other districts after Mid-Level restrictions
It talks about how the government has now (from last week) imposed height restrictions on new buildings in mid-levels.
Under the new restrictions, buildings will be limited to heights between 170 and 320 meters. some who bought older buildings there will find that they cannot raise the height of replacement buildings, and will be forced to build at the same height as the older buildings they acquired. (example: 28-story Lodge on the )Park, acquired by CK, cannot enjoy a height increase.)
Talk now is that older buildings in Western, Kennedy Town, and Wan Chai will becomne new targets, replacing midlevels. And speculators have already pushed up the value of these properties: "Prices of flats in buildings that were between 30 and 40 years old at present ranged between hk$4,700 psf and hk$5,000 psf." Rentals yields are around 6 percent. The values of older building may fall in midlevels, as developers will have less incentive to buy there, given the new height restrictions. Meanwhile, older buildings in areas without height restrictions may benefit.
===========
(The press is slowly catching up with my distate for luxury buildings, and midlevels.)
SCMP's Property section seems to reflect opposing points of view:
1/ Nervous speculators cut sales prices in rush to exits - pg.1
"Investors fear a fallout in local home prices from worsening subprime prices in the United States"
When you read deeper, you will find the article has a few reports of people cutting prices by up to 10%, including mention that "Sun Hung Kai Properties sold sold some of the remaining units at Harbour Green in West Kowloon at between hk$6,200 and hk$9,500 psf". How many attractive units were left, I wonder? And "at harbour Place, hung hom, an investors recently sold a unit at a loss, according to an agent who refused toi be named"
This is worrying to some. but i dont think that Harbour Place was priced right for what it is: a refurbishment of a public housing project which featured small windows, and poor layouts, at a fat premium to nearby secondhand prices. Also, some investors are surely hit by stock market losses (from the falling HSE and China markets), andf may be finding it difficult to raise the needed finance. It is clear that stocks are on people's minds: "Mr Lai said overall home prices were UNLIKELY to fall as much as 30 percent in line with the fall in the Hang seng index."
The article includes this sentence, which puts "the pause" into perspective: "Many investors can still make a reasonable profit given that housing is still up 20 percent year to date."
= =
2/ Expatriates buying as Rents climb - pg.3
Falling mortgage costs boost growing trend to own homes in HK
A growing number of young middle income expats are being lured into buying units in mass residential properties or old apartment blocks after years of renting their homes. Helping to drive the trend areexpectations that rents may rise about 50percent, as leases fall due for renewal during the year.
Example: 747 sf at Fortress Gardens was hk$12,000 last year; but today you would have to pay hk$18- 20,000.
Upward pressure on rents, combined with falling rates, has made it attractive to buy. And even if they buy andprices fall, these expats seem likely to hold on for the long haul, given their exposureto rental increases if they do not own.
Mortgage loans approved in Hk in january 2008 jumped almost 30 percent to hk$29.6 bn, with hk$23.7 bn of that funding purchases in the secondary market. (Much of this was simply due to higher prices IMHO.)
Comments:
"My housing allowance now almost covers the monthly mortgage instalment," said Sybil Lee a Taiwanese air hostess that mopved to HK 13 years ago. She bought a 505sf 20-year old flat in Kennedy Town for hk$2.3 million. Her mointhly mortgage payment was only hk$7,000 as she took a loan for 30 percent (??) of the sales price. "I was fed up with renting so many years."
Another recent homeowner paid hk$3.4 million for a 1,000 sf flat in a 15-year old block on Hollywood Road. "I was vacillating between my rental flat and I needed a place to live. I figured that rising rents made it cheaper to buy." many expats (including pilots and air hostesses) are looking for flats to buy in the area. Most are end users rather than investors.)
Ross Jolliffe, who bought a property on Pok Fu lam for hk$6.3 million in April last year, is considering to sell it, and buy something larger. But he is waiting tos ee if luxury prices pull back with the US credit crisis. Asking prices for flats larger than 1,500 sf on Robinson Road were about hk$14 million, he noted. "I think property prices for bigger flats are crazy."
= =
...meantime the lead article:
Height Cap points to shift in Focus
Developers may turn to older buildings in other districts after Mid-Level restrictions
It talks about how the government has now (from last week) imposed height restrictions on new buildings in mid-levels.
Under the new restrictions, buildings will be limited to heights between 170 and 320 meters. some who bought older buildings there will find that they cannot raise the height of replacement buildings, and will be forced to build at the same height as the older buildings they acquired. (example: 28-story Lodge on the )Park, acquired by CK, cannot enjoy a height increase.)
Talk now is that older buildings in Western, Kennedy Town, and Wan Chai will becomne new targets, replacing midlevels. And speculators have already pushed up the value of these properties: "Prices of flats in buildings that were between 30 and 40 years old at present ranged between hk$4,700 psf and hk$5,000 psf." Rentals yields are around 6 percent. The values of older building may fall in midlevels, as developers will have less incentive to buy there, given the new height restrictions. Meanwhile, older buildings in areas without height restrictions may benefit.
WEALTHY - BECAUSE THEY BELIEVE IT MATTERS
Interesting statistic (From China, but it gives the idea):
95 % - Pct. of people surveyed in Shanghai, who
"Strongly believe that wealth can bring happiness" - AC Nielsen, Nov.2006
================================
From today's China Daily:
Over 400,000 millionaires in HK: survey
A survey projected that there were 414,000 (HK$) millionaires in Hong kong,
and a majority owe their wealth to a booming stock market (now correcting.)
Each of these millionaires owns an average hk$9.9 million in assets,
and over the past year (2007), 228,000 peopel became millionaires.
The projected number has fallen back to an estimated 350,000 after the recent stock market correction
Those are "Hong Kong Dollar millionaires", but still, that's not bad in a city of x million.
The majority of millionaires are locals (81 percent), and 15 percent are mainland immigrants.
And most of those immigrant millionaires (81 percent) accumulated their money after arriving in HK.
Wanchai is the district where the most (16.9 percent) millionairescan be found.
Central & Western comes second (16.3 percent)
Thanks to the booming stock market, the number of young (under 30) millionaires doubled,
to one-in-47. In the 30-to-39 age group, one-in-28 is a millionaire.
AGE GROUP... : Pct. 2006 : Pct. 2007 :
21 -29 years.. : ... 1.0% . : ... 2.1% . :
30 -39 years.. : ... 3.5% . : ... 7.6% . :
40 -49 years.. : ... 7.4% . : ... 9.8% . :
50 -59 years.. : ... 6.9% . : . 11.5% . :
60 plus years. : ... 6.1% . : ... 7.1% . :
Interesting statistic (From China, but it gives the idea):
95 % - Pct. of people surveyed in Shanghai, who
"Strongly believe that wealth can bring happiness" - AC Nielsen, Nov.2006
================================
From today's China Daily:
Over 400,000 millionaires in HK: survey
A survey projected that there were 414,000 (HK$) millionaires in Hong kong,
and a majority owe their wealth to a booming stock market (now correcting.)
Each of these millionaires owns an average hk$9.9 million in assets,
and over the past year (2007), 228,000 peopel became millionaires.
The projected number has fallen back to an estimated 350,000 after the recent stock market correction
Those are "Hong Kong Dollar millionaires", but still, that's not bad in a city of x million.
The majority of millionaires are locals (81 percent), and 15 percent are mainland immigrants.
And most of those immigrant millionaires (81 percent) accumulated their money after arriving in HK.
Wanchai is the district where the most (16.9 percent) millionairescan be found.
Central & Western comes second (16.3 percent)
Thanks to the booming stock market, the number of young (under 30) millionaires doubled,
to one-in-47. In the 30-to-39 age group, one-in-28 is a millionaire.
AGE GROUP... : Pct. 2006 : Pct. 2007 :
21 -29 years.. : ... 1.0% . : ... 2.1% . :
30 -39 years.. : ... 3.5% . : ... 7.6% . :
40 -49 years.. : ... 7.4% . : ... 9.8% . :
50 -59 years.. : ... 6.9% . : . 11.5% . :
60 plus years. : ... 6.1% . : ... 7.1% . :
...Originally posted on the Main HK Property thread (on GEI) ...
EXACTLY. That's what I have been saying. It's good to see the press catching up.
What are all those overpriced agents who were ramping Luxury going to tell their clients now??
Might they not buy those overpriced peak places, and focus on the mass market instead ??
UPDATE - 1 Year on, how's Hong Kong Property doing ??
(I estimate MMCI, the Mass Market index, is up 30.95% yoy: 53.50 to 70.06)
======
Dynasty Court: $17,380 : 2008.03.18 / (HK$12,129 : 2007.03.16) +43.3%
+ Tregunter.... : $15,405 : 2008.03.18 / (HK$10,191 : 2007.03.16) +51.2%
+ Robinson Place: $10,013 : 2008.03.18 / (HK$8,266 : 2007.03.16) +21.1%
+ Taikoo Shing : $ 7,208 : 2008.03.18 / (HK$5,381 : 2007.03.16) +33.9%
Taikoo Shing............ 5,380.78 3.53%
+ Sun Tuen Mun Centre - on the Low end, in Tuen Mun
Adj. Unit Price: $ 1,873.48 : 2008.03.18 / (HK$1,632 : 2007.03.16) +14.8%
= = Newly added to Price indices = = =
+ Sorrento, in Kowloon Central
Adj. Unit Price: $ 11,543 : 2008.03.18 / est. $7,000 + 64.9%
+ Island Harbourview, in Olympic area
Adj. Unit Price: $ 7063.98 : 2008.03.18 / est. $4,900 + 44.2%
+ Tierra Verde, in Tsing Yi
Adj. Unit Price: $ 5,616.7 : 2008.03.18 / est. $ 4,300 + 30.6%
+ Caribbean Coast, in Tung Chung
Adj. Unit Price: $ 3137.73 : 2008.03.18 / est. $ 2,450 + 31.0%
QUOTE (AlexHK @ Apr 3 2008)
A lack of new apartments, dating to developers stalling projects during SARS, is creating a shortage as demand soars from first-time homebuyers, investors and existing homeowners seeking bigger apartments, said Gordon Tse, a director at Midland Realty Ltd., Hong Kong's biggest publicly traded real estate agency.
New apartments offered by developers fell to a five-year low of 11,900 units in 2007, according to the government's Land Registry.
``We are not saying luxury home prices won't go up this year,'' Tse said. ``It's just that the price probably won't grow as much as the mass market.''
. . .
The affordability ratio, which measures homeowners' average monthly mortgage payment as a percentage of their income, was at 33 percent in 2007, compared with 93 percent in 1997, when the property market was on the verge of collapse, according to figures from Midland.
``That is still a very healthy ratio,'' said Buggle Lau, chief analyst at Midland Realty. ``Many end users are now able to afford to purchase their own properties.''
The prospect of persistent low interest rates is prompting more tenants to consider switching to owning properties. Rent gains over the past three years on average outpaced growth in average mortgage payments, Midland's Tse said.
New apartments offered by developers fell to a five-year low of 11,900 units in 2007, according to the government's Land Registry.
``We are not saying luxury home prices won't go up this year,'' Tse said. ``It's just that the price probably won't grow as much as the mass market.''
. . .
The affordability ratio, which measures homeowners' average monthly mortgage payment as a percentage of their income, was at 33 percent in 2007, compared with 93 percent in 1997, when the property market was on the verge of collapse, according to figures from Midland.
``That is still a very healthy ratio,'' said Buggle Lau, chief analyst at Midland Realty. ``Many end users are now able to afford to purchase their own properties.''
The prospect of persistent low interest rates is prompting more tenants to consider switching to owning properties. Rent gains over the past three years on average outpaced growth in average mortgage payments, Midland's Tse said.
EXACTLY. That's what I have been saying. It's good to see the press catching up.
What are all those overpriced agents who were ramping Luxury going to tell their clients now??
Might they not buy those overpriced peak places, and focus on the mass market instead ??
UPDATE - 1 Year on, how's Hong Kong Property doing ??
(I estimate MMCI, the Mass Market index, is up 30.95% yoy: 53.50 to 70.06)
======
Dynasty Court: $17,380 : 2008.03.18 / (HK$12,129 : 2007.03.16) +43.3%
+ Tregunter.... : $15,405 : 2008.03.18 / (HK$10,191 : 2007.03.16) +51.2%
+ Robinson Place: $10,013 : 2008.03.18 / (HK$8,266 : 2007.03.16) +21.1%
+ Taikoo Shing : $ 7,208 : 2008.03.18 / (HK$5,381 : 2007.03.16) +33.9%
Taikoo Shing............ 5,380.78 3.53%
+ Sun Tuen Mun Centre - on the Low end, in Tuen Mun
Adj. Unit Price: $ 1,873.48 : 2008.03.18 / (HK$1,632 : 2007.03.16) +14.8%
= = Newly added to Price indices = = =
+ Sorrento, in Kowloon Central
Adj. Unit Price: $ 11,543 : 2008.03.18 / est. $7,000 + 64.9%
+ Island Harbourview, in Olympic area
Adj. Unit Price: $ 7063.98 : 2008.03.18 / est. $4,900 + 44.2%
+ Tierra Verde, in Tsing Yi
Adj. Unit Price: $ 5,616.7 : 2008.03.18 / est. $ 4,300 + 30.6%
+ Caribbean Coast, in Tung Chung
Adj. Unit Price: $ 3137.73 : 2008.03.18 / est. $ 2,450 + 31.0%
QUOTE (DrBubb @ Mar 10 2008, 07:20 AM)
DEVELOPER WARNING SIGN?
Cheung Kong has FALLEN from its yearly high of HK$159.50
...suggest that CK had better turn up soon (holding $100 support?) or a Bearish message may be flashed
CK is already below that uptrend line, as this CLOSE-UP
Cheung Kong has FALLEN from its yearly high of HK$159.50
...suggest that CK had better turn up soon (holding $100 support?) or a Bearish message may be flashed
CK is already below that uptrend line, as this CLOSE-UP
CK held $100 support, and closed Friday at HK$118.60
- -
INSIDERS BUYING - they're baack !
Today's SCMP reports that Henderson Land's chairman, Lee Shau Kee, is back in the market, buying his company's stock
Daily- Six Months : chart
He bought 5 million shares from April 2 to April 7, paying hk$291.4 million
(note: my calculator shows that's an average price of HK$58.28 per share.)
These trades accounted for a huge 36 percent of volume, and raised his holding to 1.136 billion, or 52.9 percent of capital. At Friday's $58.15, his stake is worth hk$66.1 billion.
This shows plenty of confidence, since he was buying at prices well above previous purchases in prior years. The earnings seem to justify it. Henderson land on March 27 announced a 142.24 percent gain in profits to hk$9.188 billion for the six months to Dec. 2007.
QUOTE (Nelly @ Apr 16 2008, 12:57 AM)
are you desperately still trying to ramp hong kong prices bubb?
??
What a strange comment. You seem rather clueless
I dont need to "ramp" HK prices, Nelly.
Li Ka-shing, HK's richest man, is doing it for me. He was on the tellie last night,
predicting that prices would rise 20% in 2008.
He and other top property tycoons here have spent hundreds of millions, buying back
the stock of their own companies. So they are putting their money where their mouths are.
HIGH SPEED LINK COULD BOOST WEST KOWLOON PROPERTY
New Rail line to join HK to nation's high-speed network - from SCMP
Government to build hk$39 billion border link, ease it to MTR
"Hong Kong will become the southern gateway to the nation's high speed rail network with the approval yesterday of a hk$39.5 billion plan to build a high speed rail link to the border."
Points:
+ Transport Service to begin in 2015, halving the journey time to Guangzhou to 48 minutes.
Time to Shangai will be 8 hours, and Beijing just 10 hours
+ New HK terminus in West Kowloon to be linked to the MTR. New station to be in the WK Cutural district,
where theatres, concert halls, museums, and more offices and shopping are planned.
(Note just an Arts hub, but a Rail & shopping hub too. With a link to the HK airport.)
other MTR maps : HK only : Kowloon Southern 2009 : 2006 Yearbook
+ Trains will operate at average speed of 200 km/hour
+ Work for 15,000 people, and a new 26 km underground line to the border.
+ To be built with government money and leased to the MTR.
+ Existing fare HK-G is hk$190. New fares will be higher. Govt expects 100k passengers by 2020, 120k- in 2030
FUTIAN STATION may become an important hub, with possible links to:
Shenzhen airport, and HK's airport at Chek Lap Kok
New Rail line to join HK to nation's high-speed network - from SCMP
Government to build hk$39 billion border link, ease it to MTR
"Hong Kong will become the southern gateway to the nation's high speed rail network with the approval yesterday of a hk$39.5 billion plan to build a high speed rail link to the border."
Points:
+ Transport Service to begin in 2015, halving the journey time to Guangzhou to 48 minutes.
Time to Shangai will be 8 hours, and Beijing just 10 hours
+ New HK terminus in West Kowloon to be linked to the MTR. New station to be in the WK Cutural district,
where theatres, concert halls, museums, and more offices and shopping are planned.
(Note just an Arts hub, but a Rail & shopping hub too. With a link to the HK airport.)
other MTR maps : HK only : Kowloon Southern 2009 : 2006 Yearbook
+ Trains will operate at average speed of 200 km/hour
+ Work for 15,000 people, and a new 26 km underground line to the border.
+ To be built with government money and leased to the MTR.
+ Existing fare HK-G is hk$190. New fares will be higher. Govt expects 100k passengers by 2020, 120k- in 2030
FUTIAN STATION may become an important hub, with possible links to:
Shenzhen airport, and HK's airport at Chek Lap Kok
APRIL TRANSACTIONS: Relative strength in CC, and in the "mass market", as luxury stalls
Today's SCMP talks about a slowdown in transactions in April (not surprising given the typhoon weekend):
+ Value of Property deals declines 23 percent in April (at first, looks like one "lost weekend")
+ HK$33.5 billion in April, versus $44.01 billion in March
+ Mostly fewer "high-end deals", since the number of transactions fell only 0.4% to 10,945
+ Agents report: "The Market has been consolidating since early March, after home prices jumped more than 20%
from the December quarter." Centa-City Leading Index, a weekly gauge showed a 2.5 fall from the peak set in
early March."
+ March figures were skewed upwards by the sale of 2,000 new units at The Capitol, vs. 381 new units in April for
the whole of Hong Kong
+ In April, "Transactions recorded their strongest ever growth with a 97 percent rise to 102 deals"
Today's SCMP talks about a slowdown in transactions in April (not surprising given the typhoon weekend):
+ Value of Property deals declines 23 percent in April (at first, looks like one "lost weekend")
+ HK$33.5 billion in April, versus $44.01 billion in March
+ Mostly fewer "high-end deals", since the number of transactions fell only 0.4% to 10,945
+ Agents report: "The Market has been consolidating since early March, after home prices jumped more than 20%
from the December quarter." Centa-City Leading Index, a weekly gauge showed a 2.5 fall from the peak set in
early March."
+ March figures were skewed upwards by the sale of 2,000 new units at The Capitol, vs. 381 new units in April for
the whole of Hong Kong
+ In April, "Transactions recorded their strongest ever growth with a 97 percent rise to 102 deals"
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