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Hong Kong Property - Charts & Data

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LAND AND PROPERTY - Key Points from the Budget - per SCMP

================

 

+ 52 residential sites will be made available for auction or tender in 2011-12 (to build 3,000 small and medium flats)

 

+ Enough land will be made available in the coming year to build 30,000 to 40,000 flats

 

+ Government to consider allowing "rock caverns" to be developed into usable undrground space

 

+ It will consider buying industrial buildings to house NT office of water supply

 

== ==

 

Problem: No timetable on when that land would be turned into flats

 

288083595dQEGHQ_ph.jpg

 

Question: why not do more with HK's vacant and cheap industrial space ??

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+ Enough land will be made available in the coming year to build 30,000 to 40,000 flats

 

Question: why not do more with HK's vacant and cheap industrial space ??

 

The surging property prices in HK indicate the 'real' inflaton that has set in. People are chasing property to safeguard against the erosion of their purchasing power - this is the real crime of low interest rates.

 

I feel that when a correction comes, which I feel is overdue in HK and is healthy for the market, it will be exacerbated by the gov't measures to dampen the market. Such as, people will be feeling the pressure from rising rates at the same time those 30-40,000 units come onto the market next year.

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The surging property prices in HK indicate the 'real' inflaton that has set in. People are chasing property to safeguard against the erosion of their purchasing power - this is the real crime of low interest rates.

 

I feel that when a correction comes, which I feel is overdue in HK and is healthy for the market, it will be exacerbated by the gov't measures to dampen the market. Such as, people will be feeling the pressure from rising rates at the same time those 30-40,000 units come onto the market next year.

I agree, they swings tend to get exacerbated by governmental action.

 

But I do think those flats will trickle into the market over 4-5 years.

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But I do think those flats will trickle into the market over 4-5 years.

That would time well with the peak in the 18 year cycle - taking it from the high of 97.

 

I wonder if there will be a correction before the blow-off stage? If there is I would expect it to come some time this year perhaps from macro indicators - like soverign devault, political instability, and general debt concerns.

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I agree surfdude that a correction is possible - but I think we are more likely to see a top once a combination of additional supply and higher interest rates hits the markets - this in turn may make banks reduce liquidity in the market. Trouble is with the state of the US banks/property market where will higher rates come from? US is exporting inflation to cope with its own highly deflationary property market. When US property market finds a bottom I think we will see rates gradually rise. Case Shiller seems to be pointing to a double dip in nearly all US markets and it looks to me like another year or so of price falls before we find that bottom. I'm sure the logic is that bubbles deflate back to the time point that prices start to rise strongly outside of norms - say 1997 or 1998 - and nationally the market is only back to Feb 02 prices. This implies a weaker US$ which itself will help HK property. China is the unknown to me in this mix - and maybe inflation here will keep the pressure on rates and bank liquidity although equally it could make HK more attractive vis a vie the domestice market.

 

I'm agreeing a one year lease on my soho place so I can market for sale in early/mid 2012 which should be ahead of US IR rises but also timed to coincide with the new Azure opening on Seymour Road which should help the local secondary market. If we hit a further rise of 25% this year I will sell with lease or buy the tenant out.

 

Lev

 

 

 

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That would time well with the peak in the 18 year cycle - taking it from the high of 97.

 

I wonder if there will be a correction before the blow-off stage? If there is I would expect it to come some time this year perhaps from macro indicators - like soverign devault, political instability, and general debt concerns.

There is time for one more correction... probably - but only if a correction starts soonish.

And I think there's a fair chance that HK will get caught up in a sort of perfect storm of rising interest rates.

 

I'm agreeing a one year lease on my soho place so I can market for sale in early/mid 2012 which should be ahead of US IR rises but also timed to coincide with the new Azure opening on Seymour Road which should help the local secondary market. If we hit a further rise of 25% this year I will sell with lease or buy the tenant out.

Lev

Good on you for holding on so long, but I wonder if we will have another year. I may sell my last place (where we live!) before then.

 

I may be willing to bet that Hang Lung will put the last part of Long Beach for sale right near the top sometime in 2007.

 

developer_83_front.gif

And by then, Imperial Cullinan will have topped out, and we will know who has a view left here in the Olympic area

 

In terms of the NUMBER OF FLATS COMING, and when:

 

+ A measure to "Stabilise the Property Market" announced within the Budget was: "Housing land available in 2011-12 will provide a total of 30,000 and 40,000 private residential flats, far exceeding an annual average of 20,000 flats."

 

+ On top of this, is redevelopment: "52 residential sites will be available for sale in 2011-12."

 

+ Based on what I have seen. The property next door to me (Imperial Cullinan) was sold as Land in June 2007*, and will be sold next month - That's a 4 year delay in SELLING, and move-in will be late 2011/ early next year: So 5 years from sale was approximate move-in day.

 

+ Today's Standard talks about: LAND FOR 35,400 FLATS THIS YEAR... and that's not just hot air:

"HK's on track to get land for 35,400 new private flats in the year ahead."

 

"Our disposition with regard to supplying land is very vigorous this year," said Carrie Lam.

 

Two key sites I will be watching are: Tsuen Wan West, and Nam Cheong West Rail stations ... "expected to provide 6,700 flats." (I could live at Nam Cheong- not sure about TW.)

 

The MTR tried selling the NC site in 2010, but pulled it when the bids were not high enough.

 

I think developers may start discounting their existing projects, only if new land is available at cheaper prices.

 

The government should aim to KNOCK DOWN the price of land by oversupplying the developers.

 

Lev may be right, this latest dollop of supply may not hit the market until AFTER a possible 2016-2017 peak.

 

== == ==

 

*Imperial Cullinan, was sold as Land in June 2007:

Land Sale Result 2007/2008

Date

12.June.2007 Auction / KIL 11146 : HOI FAI RD, KOWLOON

User: R1

Area----: 11 353. sqm : (note- SHKP mentions the area as: 889k sf in Total)

$5 560Mn / (794+95=889k) = $6,254 per sf Land cost

/see: http://www.landsd.gov.hk/en/landsale/records/2007-2008.pdf

1C420CA64D5DA84C0A10BE54E016-5.jpg

(rising in the empty slot to the right of TLB)

SHKP report says:

794,000 square feet (Residential)

95,000 square feet (Shopping centre)

/see: http://www.shkp.com/en/scripts/about/about_upcoming08.php

/project site: http://www.imperialcullinan.com.hk/en/

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From the Standard

 

I've read the Standard article and some are sceptical about the supply of 30-40,000 flats this year.

 

 

Patrick Chow Moon-kit, head of research at Ricacorp, said the government is overly optimistic in its ability to facilitate the construction of 30,000 to 40,000 flats annually. He predicts no more than 15,000 will be put on the market each year.

 

"To effectively improve the market, the government should regain its activeness when it comes to land supply," said Eddie Hui Chi-man, deputy director of the Research Centre for Construction and Real Estate Economics at Hong Kong Polytechnic University. "Control of land sales is mostly in the hands of developers."

 

Hui added that in the short run, he doesn't see more property measures in place. Meanwhile, after the budget announcement three new projects were launched with prices at least 20 percent higher than prevailing market prices.""

 

 

Looks to me like the developers are playing ball but I'm not convinced this will add luxury or larger units in any great numbers as quick as people say. Developer shares have reacted reasonably well to the news so I think this might be the end of their falls if the wider market stabilises.

 

I guess a correction before a final top is then more likely in the hands of US interest rates and fear of rates rises could be the trigger for falls but given where I think the US economy/housing market is I'm sticking with my plan for 2011.

 

 

 

 

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I have been wondering what effect, if much at all, has the new stamp duty tax had on speculative activity in HK property market. Has turnover been dampened from the prohibitive tax (15% if sold within the first year)?

 

Is this thread intended to replace the original HK thread (that I think was closed)?

 

If so, I suggest it is pinned where it is easier to find.

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Foster design picked for $2.8B HK cultural hub

 

Associated Press, 03.04.11, 04:22 AM EST

 

HONG KONG -- Acclaimed British architect Norman Foster has won the right to design Hong Kong's new $2.8 billion West Kowloon cultural hub.

Hong Kong's No. 2 official Henry Tang told reporters Friday that the West Kowloon Cultural District Authority board has endorsed Foster + Partners' "City Park" proposal. Others who submitted proposals were Dutch architect Rem Koolhaas and a local designer.

 

Foster's plan envisions transforming the 100-acre (40-hectare) reclaimed site for the cultural hub on Kowloon peninsula into a lush waterfront park that contains an opera house, concert halls, a museum and arts schools.

His other designs include the Hong Kong international airport, the international terminal in Beijing and the HSBC building in Hong Kong.

=============

 

More on “City Park”:

Youtube video:

http://www.wkcda.hk/pe2/en/conceptual/foster/en/index.html

 

Sources:

http://www.forbes.com/feeds/ap/2011/03/04/...ub_8338382.html

http://hk.news.yahoo.com/article/110304/4/n0ta.html

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(from another thread on Main)

 

...His argument is like this, and should be obvious for you (Bubb) too, given you live in HK: it just can't work in cities of that size.

You obviously do not know about "rural Hong Kong" - nor do most other people.

 

Paradoxically, it is rather close to the "skyscraper Hong Kong" that everyone thinks of.

 

0.jpg

 

You just take a short 40 minute ferryboat ride to Mui Wo (on Lantau Island), hop on your bicycle, and you can be in a village after cycling another 10 minutes. There is food grown in gardens in these places. And when you come off the ferrybat from Central you will be offered local produce.

 

HKUST+072.JPG

 

They do not grow enough to feed themselves. But if you have your own garden, you could survive for weeks on your own food, and maybe for months if you store some, and can keep your hungry neighbors from raiding your stores.

 

I am not really suggesting this as a survival option for BFC times, but I do think that it may make sense for the GF and I to try living in one of the villages for a week or so thsi summer to see how we like it. It beats uproot ourselves to move to some rural place, and then find that we hate it.

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Another 1.72% on the CCI leading index over last week (5.46% over last month).

 

How long is >5% per month increases in prices sustainable to already the most expensive property market in the world?

 

My bet is this heading into a blowoff top into middle of 2011 hitting a top maybe around 20% above 1997, then crashing hard in 2012 just like in 1998 (due to problems in China and/or interest rate rises) - would bet on a 14 year cycle this time round.

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We could also see a sharp correction as we did in June 2004 and then a continuance towards the Mania phase. After the bottom brought on by SARS property started rocketing upwards and then corrected for a few months.

 

The question is will we have a correction this year sometime over the summer for a few months followed by a few more years of gains. Thus presenting a buying opportunity.

 

or

 

Will we continue to have massive gains followed by the popping as in 98?

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Most of the major banks have increased their rates for HIBOR linked mortgages, albeit by a nominal amount.

 

HIBOR rates expected to increase this week by upwards of .5%

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Yes, Hong Kong Property is a bubble, so?

 

EXCERPT from a Blog by ...

Zarathustra / 28 January, 2011,

 

It seems that we have had too many stories these day on how expensive Hong Kong real estate is.

. . .

I have made it quite clear in my own 2011 Hong Kong Property Forecast that fundamentals of Hong Kong real estate market are not as strong as people think. Population growth is slow, so the idea that there is a supply shortage is, in my view, nonsense.

. . .

The only thing that sustains the current level of home prices is record low interest rate, which was made possible by the quantitative easing in the United States as Hong Kong dollar is pegged with US dollar, and the inflow of money from the Mainland. Clearly, the current ultra-low interest rates are not sustainable. The question is when interest rate is going to rise, or when the money flow will become unfavourable to Hong Kong real estate market. Money may stay around longer than we like to see, but it can also leave more quickly than we feel comfortable.

 

/more: http://www.alsosprachanalyst.com/real-estate/yes-hong-kong-property-is-a-bubble-so.html

 

== == ==

 

"HIBOR rates expected to increase this week by upwards of .5%"

It was a minor rise in rates, but it may begin to slow the rising tide in HK Property prices.

I think it will take a bigger rise to REVERSE prices, and probably we will see such a rise in 2011.

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Here's more from the same blog:

 

HK Property, beginning of the end

 

 

Major banks in Hong Kong increased mortgage rates last week, and some other banks followed this week.

 

Interest rates hikes by these banks have nothing to do with interest rates in the United States. Even with the currency peg, the belief that interest rates in Hong Kong will follow that of the United States is simply a fallacy, so it should not be surprising to see rates going up before the Fed. There is no major indication that funds are flowing away from Hong Kong despite the apparent weakness in Hong Kong dollar: HIBOR is still very low, and money supply actually rose back slightly in January. Some feared that Japan’s earthquake may cause funds to flow out of Hong Kong.

 

Hong Kong Property Market is definitely a bubble being inflated by monetary expansion and the illusion of low supply, what it needs now is something to trigger the burst of it.

 

Although such a rise shouldn’t be a great concern (for now), the fact that real estate prices have risen so much in the past 2 years makes Hong Kong property a very risky investment indeed, and such rise in interest rates weighs on sentiment. Together with the impact of Japan’s earthquake, market sentiment dropped over the weekend and transaction volume fell, and the stock market crash in Japan does not bode well for the property market sentiment even though the aftermath of Japan’s earthquake has very little to do with Hong Kong.

 

Overall, these may mark the beginning of the end of the epic Hong Kong property bull market 2009-2011. Although I don’t expect any immediate huge drop in property prices, I believe the property market is now reaching its peak with very limited upside.

 

 

Many salient points raised on the blog and I agree with most of them. If I were debating whether to sell or not at this time I know which way I would lean towards. I suspect the correction will come sometime in mid-year but I am not convinced that this will be the end of the bull run but rather a pause but the end could be soon if HK runs on a 14 year cycle but I believe the previous work done on this indicates a 18 year cycle. Of course these are only guidelines that are sensitive to macro events like a debt crisis.

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Food for thought for Hong Kong?

Japan suffers now / The West later ?

Perhaps he is right:

 

My best guess is that the situation in Japan will unfold over the next two weeks, with a full blown funding and fiscal crisis (of confidence) blossoming there over that time. Already we are seeing credit spreads on Japan's sovereign debt begin to skyrocket, meaning that an increasing chance of a sovereign default is being priced into the debt markets. This is the same dynamic we saw with Greece, then Ireland, Iceland, too, and so on. Only this time it is happening to the world's third largest economy.

 

Two weeks after that, I expect that the first real product shortages and associated work stoppages will begin to hit the US and European economies

 

I don't think all the bad news is priced in.

 

Fear is intense, but some things that are not feared will come out of the woodwork anyway

 

I wish I had more room for food storage here in HK.

 

Where do you guys store extra food?

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HK only gets 1-4% of its food from Japan. Alot of this will come from Kyushu, Southern Honshu and will be fine but I suspect people may be reluctant to buy it. Food supplies will continue to flow from China (maybe not salt), thailand, philipines,Brazil...

 

I am not sure a food crunch will come to HK. However, it may be prudent to have on hand some supplies in case of emergencies (black swan event). Drinking water, sack of rice, pocketknife, flashlight...

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I am not sure a food crunch will come to HK. However, it may be prudent to have on hand some supplies in case of emergencies (black swan event). Drinking water, sack of rice, pocketknife, flashlight...

Think what would happen if a 20 foot wave (from a Tsunami) were to hit Hong Kong:

 

+ Much of the cities buildings might survive, but much would be washed away and there would be huge casualties

+ The MTR, buses, and ferries would be immobilsed

+ Electric power and water would be knocked out for sometime

+ Food distribution would be disrupted for many days

 

Much of HK's population lives day-to-day and stores little food. If the food is not resupplied then much of the population would be starving within very few days. An ugly situation which illustrates how little resilience Hong Kong has in certain scenarios.

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The following chart compares the Centaline index (for HK property) with the Hang Seng Index / HSI.

 

hsi.gif

 

Updates: Centaline index : HSI-to-12/2011 : HSI-w/MAs : HSI-wk-4yrs : HSI-D-2yrs

 

I think we may be within a topping region now for the Centaline index, especially if the HSI breaks down below 20,000 and/or within 2011 the HSI fails to exceed its 2010 highs.

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In case there are other CHARTISTS reading this thread, I have added a few lines

 

hsi2.gif

 

Here's a close-up of the last three years - the market can been seen to be in an ascending wedge

 

HSI / Daily-since 2009 ... update

hsi3.gif

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Buyer's market

Home purchasers are seeing more reasonable deals in the secondary residential market, as vendors seem willing to drop their asking prices. Price cuts of 3 to 8 percent can be found in benchmark projects in Kowloon and the New Territories, including City One in Sha Tin, and Mei Foo Sun Chuen.

. . .

However, there was little action on Hong Kong Island, where benchmark projects like Tai Koo Shing, Kornhill and South Horizons recorded only one deal over the past weekend, as prices remained firm, Midland Realty said.

 

At Grand Promenade in Sai Wan Ho, an owner reduced his asking price twice - to a total of 3.75 percent off - before selling his flat for HK$6.16 million.

 

The recent price cuts suggest market participants have become more rational, said Jeffrey Ng Chong-yip, a director at Hong Kong Property. "Many potential homebuyers, particular end-users, are reluctant to buy at high price levels. Owners also realized that, so many of them are willing to cut prices," he said.

 

But Ng noted the volume of recent transactions was still below average, as many potential buyers remain on the sidelines. "Even some banks are slow in providing valuation quotes lately."

 

Midland Realty chief analyst Buggle Lau Ka-fai said the number of registrations in the secondary market is expected to fall further in the coming months. "The HIBOR-based mortgage rate hike and the Japan crisis are having quite an impact on the market."

 

The top five lenders, including Bank of China (2388) and HSBC, have all raised their Hong Kong interbank offered rate-based mortgages this year

 

/more: http://www.thestandard.com.hk/news_detail.asp?we_cat=16&art_id=109678&sid=31854243&con_type=1&d_str=20110331&fc=7

 

== ==

 

...this doesnt sound cheap:

 

"The Gloucester, a residential project by Henderson Land Development (0016) in Wan Chai, launched more than 70 flats over the weekend. They were priced at HK$20,455 psf on average - 1 to 3 percent higher than that of similar flats in the secondary market nearby.""

 

We saw it, and found it well-marketed, but wall over-priced compared to other properties on HK island.

(I think I would prefer Island Crest)

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2,700 flats coming on market - in April, trumpets The HK Standard

 

"Meantime, teh secondary market performed poorly over the weekend. Kornhill, Discovery Park, and Laguna City - three benchmark residential projects in Hong Kong Island and Kowloon - recorded ZERO SALES."

 

The new properties are:

 

+ Lions Rise / Wong Tai Sin : 968 flats (Kerry Properties)

 

+ Imperial Cullinan / Olympic Station : 650 flats (SHKP - 800-1900sf from HK$35 mn)

 

+ One Regent Place / Yuen Long : 337 flats + 8 Hs (SHKP - launched in Shenzhen)

 

+ Uptown / Yuen Long : 37 Houses (CHeung Kong)

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MORTGAGE STATS - per BarCap report

 

+ Hong Kong bank mortgage debt : up 37% from mid-2007 to end-2010

+ Bank Mtg Debt: HK$740 billion (end 2010) was $530bn, mid-2007

+ Total Mtg Debt: HK$760 billion (end 2010) was $501bn, 1997

+ Ave. mortgage debt per unit (HK$688k/unit), 29% above 1997 peak

+ Cause : Gearing up by investors/speculators

+ Mtgs on 463,000 flats in 2010 - that's 52% of Housing stock

+ Ave. price per unit: HK$4.62mn (1997), and HK$4.67mn (2010)

+ LTV: 28% in 1997, and 35% LTV in 2010

 

"We suspect that the low cost and easy availability of debt, combined with the

expectation of house price inflation, have clearly encouraged investors/speculators to pay

more for property and encouraged them to hold more than they normally would. It has also

encouraged them to gear up more aggressively, supported by the low holding costs and the

prospect of making a profit on the back of someone else’s money."

 

"In the physical market, the government’s announced 10.5% vacancy rate for properties over

1,100sq ft is evidence, in our view, of the increasingly investment-driven demand of Hong

Kong’s housing market for holding better quality property (front running mainland money

flows). Given that there is typically a 10% sales price discount for a tenanted property,

deflating mortgage costs by capital appreciation shows the incentive for investors to continue

to hold properties vacant for easier future sales, whilst speculating on future price increases."

. . .

"This relatively low level of cash buying is consistent with our belief in a growing market for

RMB arbitrage loans, which currently afford mainland buyers an attractive interest rate carry

and allow circumvention of China’s capital controls (despite the popular belief, few buyers

bring brown suitcases of cash over the over border). RMB arbitrage loans see a customer, in

this case a mainland property buyer, depositing cash in the mainland subsidiary of a Hong

Kong bank. Against this cash, the Hong Kong bank would lend HK$s for unspecified

purposes (ie, typically through a corporate loan) in Hong Kong. We suspect some of this

money is finding its way into the property market, even where not booked as mortgage debt."

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SHKP's Imperial Cullinan blocks name first revealed

Layout of the 4-bedroom with 2 en-suite unveil

 

4229_4774_hr.jpg

 

The Imperial Cullinan, Sun Hung Kai Properties (SHKP)'s new waterfront luxury residential project on Hoi Fai Road, staged its first local roadshow last week right after another one in Futian, Shenzhen. The roadshow was held in Oval Atrium, Podium Level 1 of Two International Finance Centre, Hong Kong. Debut of the project's master plan and information was ardently received. Today, SHKP will launch the project's blocks name and 4-bedroom (with double suite) flats in response to customers' demand. Hong Kong buyers can experience the Imperial Cullinan's excellent design unmatched in West Kowloon ...

. . .

"The Imperial Cullinan includes 6 blocks, namely Imperial Seafront, Imperial Seaview, Imperial Seabank, Imperial Seashore, Imperial Seaside and Imperial Seacoast. The 4-bedroom flats (with double suite) first put on sale is composed of flats in the 1st, 2nd, 6A-6B and 8th blocks. The district-rare 4-bedroom flats boast flexible partitioning and unique designs."

 

About Imperial Cullinan

 

Imperial Cullinan is a new luxury residential project by SHKP in a prime location at 10 Hoi Fai Road in southwest Kowloon. It will have a panoramic view of Victoria Harbour and will form a brace of waterfront luxury with SHKP's The Cullinan, in an oasis of luxury living that provides a perfect counterfoil to the IFC and ICC commercial landmarks. The project will have six blocks containing approximately 650 first-class residential units. Standard units will range from about 800 to 1,900 square feet in layouts from two to five bedrooms. The development will also have unique harbour front units that will set it apart as a prime luxury development in southwest Kowloon.

 

For details, please click the following links:

English version: http://www.shkp.com/en/scripts/news/news_press_detail.php?press_id=4240

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A HONG KONG TSUNAMI ?

 

Today's SCMP has an article: (page A3)

 

Is HK safe from tsunamis? Experts say no

 

"A computerised simulation of seismic dangers by a US professor and his team found that a magnitude 9 quake along a trench in the South China Sea could trigger tsunami waves up to eight meters high that could hit Hong Kong and nearby cities."

 

+ Study by David Yuen, a Univ. of Minnnesota professor

+ He assumed a magnitude 9 eartthquaek struck the Manila trench

+ In a worst-case scenario, teh waves hitting Guangdong, HK, and Taiwan would be 5-8 metres high

 

+ Recent earthquakes give a false impression that HK is safe

+ Some historical records indicate a 10 metre wave hit Taiwan in 1782, killing 40,000 people

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