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Hong Kong property outlook - and Data Base

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CONFUSION? - Or Opportunity?

 

Bulls and Bears can both find some solace in the SCMP and HKS these days

 

BEARS might like this:

"Reacting to the negative sentiment, some wary local property investors had begun offering discounts of 5 to 10 percent on homes."

- Wed. SCMP, P1

 

"Stocks turmoil as new panic hits US, Europe."

- Thu. HKS, Pg1

 

BULLS might like these:

"... but there were no signs so far of bigger foreign investors seeking to sell their residential or commercial properties at discounted prices."

- Wed. SCMP, P1 (second part of sentence, above)

 

"Hong Kong is the number one destination for international businesses."

- Wed. SCMP, P1 (same article)

 

"Rents for luxury properties in Hong Kong have grown at twice the rate of the mass market thsi year as prospective buyers opt to lease instead..."

"...Rents for luxury residential flats had risen between 2pc and 3pc a month this year, compared with rises of between 1pc and 1.5pc in the mass market."

"Owners were now asking for rent increases of between 20 pc and 30 pc... and some expatriates were still willing to pay because they did not want to relocate."

- Wed. SCMP, P2

 

(Fed's decision)

"US Fed's low risk pledge is a double-edge prospect for HK"

"Hong Kong automatically inherits US interest rates. So if the Fed is going to keep its short term rate at zero for another two years, it means HK's own benchmark one month Hibor rate will stay someshere close to its current 0.22 per cent level until at least the middle of 2013. That's good news for anyone paying off a mortgage... This will support Hong Kong property prices."

- Thu. SCMP Monitor column, B10

 

YOU PAY YOUR MONEY, and you take your choice

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PRICE CUTS NOT REAL - only the press are falling for the "discounts"... until now.

 

HK Standard has reported this sensibly, thank goodness

 

Examples of overpricing can easily be found around the market. A flat owner chopped HK$2 million - or 14 percent - off the asking price before selling a 1,176-square-foot unit at City Garden in North Point for HK$11 million, or HK$9,354 per square foot.

 

The discount may seem big, but neighboring flats sold recently at HK$9,047 psf on average. That mean

s the new owner of the flat actually paid 3.3 percent higher than market price.

 

Another homeowner lopped HK$340,000, or 7.4 percent, off before selling an 846-sq-ft apartment at Belvedere Garden in Tsuen Wan for HK$4.26 million, or HK$5,035 psf. Neighboring flats are priced at an average of HK$4,830 psf - meaning this purchaser shelled out 4.2 percent more.

 

"The price slashing is not really real, and it cannot truly reflect the decrease in property prices, which is only around 5 percent from the start of the year," Hui said

 

/more: http://www.thestandard.com.hk/news_detail.asp?we_cat=16&art_id=114025&sid=33353435&con_type=3&d_str=&fc=7

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Better than Oil Street?

 

13 developers bid for station project

26-08-2011

 

A total of 13 developers have submitted bids for a property project above Nam Cheong Station. The MTR Corporation said the market response was satisfactory. It's expected to announce the tender result next month. Last year, the MTRC scrapped a previous tendering exercise, after only three developers competed for the site. The residential and commercial site is estimated to be worth between HK$13.2 and HK$21.1 billion. It will provide 3,300 flats.

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This Lady's not for turning...

 

Hk-WestKow-Aug26.png.jpg

 

Not in West Kowloon and not yet. Prices were released yesterday: 26 Aug. 2011

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13 developers bid for station project

26-08-2011

A total of 13 developers have submitted bids for a property project above Nam Cheong Station.

Looking back...

 

MTR kicks off tender process for Nam Cheong station project

 

22 April 2010 - South China Morning Post

 

The MTR Corp yesterday kicked off the tender process for the HK$33 billion Nam Cheong station commercial and residential project, in line with the government's policy of releasing more sites to cool the overheated property market.

 

A spokesman for the railway operator said the company would invite developers to submit expressions of interest today.

 

Developers will have until next Thursday to show their interest.

 

The project on top of the station in Sham Shui Po is close to two public housing estates - Fu Cheong Estate and Nam Cheong Estate. The 6.2-hectare site could house nine 7- to 9-storey low-rise and nine 42- to 46-storey high-rise residential buildings with a 287,732 square foot shopping centre. It could provide 3,300 units with a total residential floor area of 2.96 million sqft and is scheduled for completion in 2016.

 

The MTR is negotiating the land premium with the Lands Department. The firm estimated the project's total investment cost, including the land premium levy and construction cost, at about HK$33 billion.

 

As the project will be developed in two phases, the developer could pay the premium in two stages.

 

According to Centaline Property Agency data, property prices at the seven-year-old Metro Harbour View (MHV) range between HK$4,964 and HK$5,137 per square foot.

 

( Today: MHV : $7,074.75 psf - chart )

== ==

 

(2)

26 May 2010 - The Standard

 

Only three developers have submitted tenders for the HK$33 billion residential- commercial development atop Nam Cheong station near Cheung Sha Wan.

 

Cheung Kong Holdings (0001), Henderson Land (0012) and Sun Hung Kai Properties (0016) were the only bidders although 12 developers expressed interest earlier.

 

``Given the project's large scale, high investment, numerous market choices, we find having three tenders very satisfactory and within our expectations,'' said MTR Corp (0066) property director Thomas Ho Hang-kwong.

 

...The premium for the first phase of 1,900 flats alone will amount to a record HK$13 billion, or an accommodation value of about HK$6,500 per square foot given a gross floor area of over 1.9 million sq ft.

 

Ho expects the winning developer, which will be announced as soon as possible, to begin the second phase two years later after construction work for the high-speed rail finishes.

 

(3)

Hong Kong Cancels Tender For Nam Cheong Station Property Project

28 May 2010

 

HONG KONG (Dow Jones)--The tender for the property project located above Nam Cheong station in Hong Kong's Sham Shui Po district has been canceled, Nam Cheong Property Development Ltd., the government-backed company overseeing project, said Friday, without providing a reason for the cancellation.

 

Analysts said the cancellation suggests developers might have had reservations about making a massive investment in the Nam Cheong project when the government is scheduled to auction a prime site in Ho Man Tin in Kowloon in June and another high-end site on The Peak in July.

 

The HK$33 billion project drew tenders from blue-chip developers Sun Hung Kai Properties Ltd. (0016.HK), Cheung Kong (Holdings) Ltd. (0001.HK) and Henderson Land Development Ltd. (0012.HK).

 

'This will be interpreted as a negative signal (for the property market),' said David Ng, the head of regional property research at Royal Bank of Scotland. 'But the withdrawal may also suggest developers weren't satisfied with the share of the profits they would have got from the project.'

 

 

(4)

China Real Time: Has the Tide Turned on Hong Kong Property?

 

2 June 2010 - Wall Street Journal

 

Many Hong Kongers are holding their breaths for a dive in property prices after government moves to cool the market and after two sites were auctioned off at disappointing prices. But will a drop really happen?

 

A mild correction, yes. But the likelihood for any major near-term price decline is very small.

 

Some argue that the tide has changed after two recent auctions fetched lower-than-expected prices. The real-estate market was dealt a further blow after a mega high-end property project at Hong Kong's Nam Cheong subway station was withdrawn by the government due to unattractive bids.

 

But how indicative are these transactions? Not very, according to surveyors and market watchers.

 

Sites sold at recent auctions were situated in noncore areas near the airport of the Lantau Island and Fanling district of Hong Kong's New Territories. Both drew only mild interests from small- and mid-sized developers because their locations are not well suited to luxury homes. Developments that fail to generate lucrative premiums aren't coveted by big builders these days.

 

The massive residential/commercial project at Nam Cheong station has the ideal location for high-end homes, but it carries a hefty land premium of 13 billion Hong Kong dollars ($1.67 billion), or nearly HK$6,600 ($847) a square foot,

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PRICE WAR in the making ? / Maybe not

 

That was the headline in the Standard based on this "coming supply"

 

Price war in the making

 

Tony Liaw ... September 01, 2011

 

A looming glut of flats may trigger a price war, driving home prices down further, as a fresh supply of more than 10,000 new homes is ready to hit the market in the fourth quarter. But weak market sentiment is hampering demand, said Lawrence Poon Wing-cheung, a specialist in real estate development at City University.

"Developers may find it really hard to sell their flats due to the volatility in the equity markets," he said. "A price war should be expected."

 

Poon added that effects from the prolonged low interest rate environment have been offset by a stalling global economy.

 

"Home prices could slump 20 to 30 percent," he predicted.

 

Government measures launched last November appear to have substantially cooled the previously red-hot property market.

 

For the first six months, only 4,000 new flats were put on the market - some 30 to 50 percent fewer than that in the same period in the previous two years.

 

But with ongoing construction there will an unprecedented 10,417 new homes coming onstream in the fourth quarter.

 

As follows*:

 

FLATS COMING ONSTREAM

 

District==== : Units : Project==== : Developer

(HK Island)

Wan Chai---- : 0,237 : One Wachai- : Chinese Est. / URA

Happy Valley : 0,126 : The Altitude- : Kerry Prop. / Peterson Gp

Tai Hang----- : 0,103 : 9 Warren St. : Wing Tai Prop.

Wong ChukH : 0,411 : Marinella--- : K Wah / Sino / Nan Fung

(Kowloon)

Olympic Sta.- : 1,234 : Long Beach : Hang Lung

WK / Kow-Sta : 0,740 : Hoi Wan Rd : Sino / Nan Fung / etc.

Hung Hom---- : 0,464 : Chatham Gt. : SHKP / Shun Tak

Kowln. Tong-- : 0,120 : One Mayfair : Sino Land

(N.T.)

Tai Po ---------- : 1,235 : Providence : Sino / Nan Fung / others

Tai Wai --------- : 1,548 : Fest. City III : Cheung Kong / MTRC

Sha Tin --------- : 0,981 : Che Kung T. : New World / MTRC

Ma On Shan --- : 0,919 : Lok Who CS : Henderson / New World

Tseung Kwan O : 1,028 : The Wings - : SHKP / MTRC

Tseung Kwan O : 1,169 : LaSplendeur : Cheung Kong / MTRC

Lantau Island -- : 0,102 : Amalfi, DBay : HK Resorts Int'l

Sun Hung Kai Properties (0016) launched Imperial Cullinan in June. A special apartment was quickly sold at HK$42,800 per square foot, establishing a new record in the district around Olympic MTR Station. Expecting home prices to stand high with a splashy opening, the developer planned to release more batches.

 

However, as the Hong Kong Monetary Authority tightened mortgage lending further, and stocks retreated on global financial turmoil, SHKP ha

s not yet sold all luxury flats in the project.

 

"The developer originally had a target of selling all units within two weeks after the launch," a property agent said. "It's now more than two months, and there are still over 10 flats available."

 

/more: http://www.thestandard.com.hk/news_detail.asp?we_cat=16&art_id=114748&sid=33575368&con_type=3&d_str=&fc=7

 

 

"10 flats available" out of 650 flats is hardly a big deal !

What horse-pucky !

*Hang Lung's 1,234 flats were completed in 2004, and they have been waiting for the right time to sell.

Like the other HK developers they are financially strong and can go on waiting.

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Posted on AsiaXpat by OffThePeak (3 days ago)

 

(info from Centaline- release 2 Sept. 2011)

UP YET AGAIN...

[Centa-City Index]: 99.36 + 0.96 %

[Mass -City-Index]: 97.84 + 1.15 %

 

West Kowloon ----- chg. in last month

The Arch : 21,311.00 : +10.02 %

Sorrento : 15,918.05 : + 2.81 %

Park Avenue/

Central Pk : 10,627.55 : + 6.63 %

Isl. Harbvw : 9,284.94 : + 4.57 %

 

This doesn't look like a "sliding market" to me !

As the estates I am following in West Kowloon all show a nice jump in the last month.

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Hong Kong Site Sells for $400 Million

 

By POLLY HUI

 

HONG KONG—Blue-chip giant Sun Hung Kai Properties Ltd. paid less than expected for a New Territories residential site at an auction Tuesday, underscoring concern about the outlook for the real-estate sector amid market volatility and rising mortgage rates.

 

The US$400 million price affirmed the view among some analysts that the city's long-sizzling property market has been cooling for some weeks. At the government's last land auction in August, a luxury residential property site garnered just one bid—also below market forecasts.

 

The site sold Tuesday, Tseung Kwan O, is one of Hong Kong's fastest growing mass-market residential areas located partially on a former landfill. Property development in the northeastern neighborhood have gathered speed in recent years after a subway line linked the area with urban Hong Kong.

 

The winning bid from Sun Hung Kai was below the forecast of 3.2 billion Hong Kong dollars to 3.96 billion Hong Kong dollars (US$410.6 million to US$508.1 million) from five analysts and surveyors polled by Dow Jones Newswires, and was 9.5% higher than the opening bid of HK$2.85 billion.

 

Official data showed home prices in the city rose 14% in the first six months of the year, following a 56% surge in 2009 and 2010 brought about by abundant liquidity, record-low interest rates and a flood of investors from mainland China.

 

To rein in soaring property prices, the government pledged to increase land supply in this fiscal year, ending March 31, 2012, by selling 52 residential sites.

 

The 13,393-square-meter (about 144,000-square-foot) site in Tseung Kwan O has a maximum gross floor area of 73,662 square meters. To ensure an adequate supply of apartments for the middle class, the government will require Sun Hung Kai to build 960 to 1,010 residential units on the site.

 

Centaline Professional Services Ltd. Chief Executive Victor Lai said the disappointing auction result shows that developers remain cautious because of a volatile market and the restrictions imposed on the site developer.

 

"I believe the government has adjusted downward the reserve prices for the three plots sold today after learning from the previous auction when only one bid was made," the surveyor said.

 

Mr. Lai added that big developers aren't keen on buying land with restrictions on both the minimum and maximum number of units to be built, as such restrictions significantly reduce the number of potential buyers developers can target.

 

/more: http://online.wsj.com/article/SB10001424053111904537404576554092111875536.html?ru=MKTW&mod=MKTW

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(From Asia Xpat):

 

Posted by OffThePeak on : "Sell your property NOW"

 

I must admit that I was a little surprised by the NEGATIVITY expressed in yesterday's SCMP. There were several bearish articles, centering around the "lower than expected" prices on the Land auctions. It was almost as if someone On High had asked SCMP writers and editors to Talk the Market Down ! The Estate agents would like to see that too, since they know that they will do more business now if vendors cut their asking prices.

 

The only problem is: Prices are not falling much. In fact they are still rising in some areas, like West Kowloon.

 

Hong Kongers are lucky, because the property market is very transparent here, and there is plenty of data. And I am one of those people who actually bother to study it carefully. That is so that I do not have to "buy it" when Estate Agents or the Press are spouting BS - as some to be doing at present.

 

So here's what I see:

 

+ Rents are still rising in Hong Kong

+ Interest rates are off their lows, but still near historically low levels

+ As a result of these two factors, it is cheaper to own than to rent for most people

+ We are not (yet) seeing the sort of mass exodus of expats that we saw in 2008, before the property market collapsed

 

As a further check on the reality of the current state of the property market, I look at the data from Centaline. It shows only a tiny nudge down from the highs, which - according to their data came in the week ended 5 June 2011 when the Centaline City Leading Index (CCLI) hit 100.72.

 

Here's a comparison:

 

Index-2011: 05.Jun. : 28.Aug. : change

CCLI-------- : 100.72 : 099.41 : - 1.30%

CMMI------- : 097.67 : 095.43 : - 2.29%

W.Kowloon*: 100.64 : 102.95 : + 2.30%

 

*An index composed of: The Arch, Sorrento, Central Park, Island Harbourview

 

Please, any press folk reading this... A little bit more research and a little less "winging it" with pure "opinion" if you please !

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Feeling the pinch

Karen Ha .. Thursday, September 15, 2011

 

The launch of new flats in Tseung Kwan O has put a damper on both transactions and property prices in the area.

To add to the woes of would-be home sellers, transactions of flats in the secondary market in the area have declined, as potential buyers are gravitating toward the two new projects in the neighborhood.

 

Cheung Kong (0001) on Monday kicked off the sale of its latest phase in Lohas Park - La Splendeur. Sun Hung Kai Properties (0016) will follow soon with The Wings, its project atop the Lohas Park MTR station.

 

The two developments combined are expected to add 2,196 flats to the area in the next couple of years.

 

More than 10,000 potential buyers, including a large number from the mainland, visited the show flats of La Splendeur, with the first batch of 108 three- to four-room flats to be sold for an average price of HK$5,971 per square foot - around 12 percent lower than the HK$6,800 psf that the developer originally hinted at a week ago. As of last night, the developer had received 600 reservations.

 

Cheung Kong also yesterday revealed its pricing - HK$5,982 psf - for the second batch of 108 flats in La Splendeur.

 

Sam Cheung Kwok-fung, a Hong Kong Property agent, said around 5 percent of potential buyers have returned to the primary market after seeing prices at the new flats comparable to those for sale in the secondary market.

 

"Most of them are end-users from nearby estates, such as Ocean Shores, Park Central and Residence Oasis, who are look

ing to buy three-room or four- room units to improve their lifestyles."

 

However, homeowners do not seem to be perturbed by this trend and are not contemplating slashing prices just yet. "Most of them are in no hurry to sell, given the current low interest rate environment. We can't even see anyone being flexible enough to bargain," Cheung noted.

 

But secondary home prices can drop by 2-3 percent if developers continue to thrust lower-priced units at buyers, he said.

 

Transactions from Saturday to Tuesday were rather low - only 20 secondary deals were recorded in the Tseung Kwan O area, perhaps, as a result of the recent disappointing auction.

 

Last week, the government auctioned off the 144,238-sq-ft Tseung Kwan O Area 66A site for HK$3.12 billion, or HK$3,934 per buildable square foot. The price did not reach the market's lowest estimate of HK$3.2 billion, and was 15 percent lower than the 132,000-sq-ft Area 66B site that was sold for HK$3.37 billion last year.

 

The auction itself may not have affected the secondary market much, but it appears to have jolted developers out of their aggressive pricing of flats.

 

The low pricing in turn dragged down transactions in the secondary market.

 

"Before the land auction, many owners were aware of the developmental limitations of the site. So, the lower-than-expected price was within their expectation, and very few owners slashed their home prices," said Alex Wong, a Midland Realty agent.

 

Aside from the two new projects, there are six more plots, with a total 947,977 sq ft, waiting to be triggered off the application list. Experts forecast the six sites, along with La Splendeur and The Wings, as well as the two sites in Area 66A and 66B, can altogether provide up to 10,000 homes.

 

However, Cushman & Wakefield surveyor Vincent Cheung Kiu-cho believes that is an overestimation.

 

"Three of the six sites on the application list are projects with low-density buildings. Plus, the government has mandated developers not to build walled buildings there, so the height of future buildings on the other three sites can only be lower than the current ones," Cheung said.

 

He is of the view that prices of neighboring flats will rise only 5-10 percent due to the new supply.

 

AG Wilkinson & Associates director Ringo Lam Chun-chiu said: "Even if the sites can provide up to 10,000 units, that does not mean there will be an oversupply of affordable homes, which in turn will drag down prices.

 

"We still don't know how developers are going to position these sites. If these flats are positioned as luxury units and targeted toward mainland buyers, prices will not affect the secondary market at all."

 

Lam foresees secondary home prices in the neighborhood growing by at least 10 percent.

 

Secondary flats at 19 major projects in or near the Tseung Kwan O area are now being priced at HK$5,766 psf, according to Hong Kong Property.

 

Within a 20-minute travel time from Tseung Kwan O, similar flats at North Point, such as those at Healthy Gardens and Island Place, are now being sold for HK$8,000 to HK$10,000 psf. New flats are even being sold for at least HK$15,000 psf.

 

/see: http://www.thestandard.com.hk/news_detail.asp?we_cat=16&art_id=115154&sid=33725275&con_type=3&d_str=20110915&fc=7

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ANOTHER 20-30% BEAR

 

http://www.alsosprachanalyst.com/real-estate/hong-kong-property-further-warnings-on-macro-risks.html#ixzz1YUBr4zVT

 

The Euro is crashing, and US dollar has strengthened, consistent with my bullish US dollar call made few months ago. On top of my medium term bullish call on the US dollar, I believe that in a significant crisis (which I believe we are in one), US dollar and US dollar denominated assets (like US Treasury securities) will remain to be the place to go, thanks to the liquidity and the depth of the market, increasing the demand for US dollar (at least in the short term). While the strength of the US dollar is never the whole story for Hong Kong property, this has been allegedly the key reason many property bulls cited (who all invariably believe that US dollar will become toilet paper). The reality is turning out increasingly consistent with my controversial bullish US dollar call.

 

I also have very little confident that a significant financial crisis in Europe and slowdown in the United States will not bring down China. The Chinese economy will have trouble to extend the life of the debt-fuelled and investment-driven growth model further, thus whether the policy makers can prop up the economy in the event of hard-landing is questionable. Even if Chinese policy makers try their best not to over-tighten their own policy, there will be nothing to stop the Chinese economy from hard-landing, and it is not sure if policy makers can prop the economy up for one more time.

 

In any event, Hong Kong economy will be extremely vulnerable, and I believe the probability of a recession is now significant. That will also means the the property market will be very vulnerable.

 

I did point out that a few other popular bullish factors which every bull likes to cite like real interest rates and rents have been historically lagging the turning points in the physical property market. Even though real interest rates remain negative and rents are still rising, these might very well be the last move. Put it in another way, inflation will come down if recession happens, and rents will come down subsequently as well, and they probably lag behind property prices for 1-2 quarters.

 

Given the vulnerability of the property market to liquidity shock as well as the meaningful risk of recession, I hereby reiterate my call on Hong Kong property market, which is the base case of 0-10% rise for the full-year, with the lower bound of the range more likely, implying a correction of 10% or more. I would also tentatively estimate that property prices may correct by at least 20-30% from here by the end of 2012. The risk for both year-end estimates lean towards the downside in my view, that means I believe that any correction bigger than that might be possible should the macro situation deteriorate more than currently expected.

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ANOTHER 20-30% BEAR

 

http://www.alsosprachanalyst.com/real-estate/hong-kong-property-further-warnings-on-macro-risks.html#ixzz1YUBr4zVT

 

The Euro is crashing, and US dollar has strengthened, consistent with my bullish US dollar call made few months ago. On top of my medium term bullish call on the US dollar, I believe that in a significant crisis (which I believe we are in one), US dollar and US dollar denominated assets (like US Treasury securities) will remain to be the place to go, thanks to the liquidity and the depth of the market, increasing the demand for US dollar (at least in the short term). While the strength of the US dollar is never the whole story for Hong Kong property, this has been allegedly the key reason many property bulls cited (who all invariably believe that US dollar will become toilet paper). The reality is turning out increasingly consistent with my controversial bullish US dollar call.

 

I also have very little confident that a significant financial crisis in Europe and slowdown in the United States will not bring down China. The Chinese economy will have trouble to extend the life of the debt-fuelled and investment-driven growth model further, thus whether the policy makers can prop up the economy in the event of hard-landing is questionable. Even if Chinese policy makers try their best not to over-tighten their own policy, there will be nothing to stop the Chinese economy from hard-landing, and it is not sure if policy makers can prop the economy up for one more time.

 

In any event, Hong Kong economy will be extremely vulnerable, and I believe the probability of a recession is now significant. That will also means the the property market will be very vulnerable.

 

I did point out that a few other popular bullish factors which every bull likes to cite like real interest rates and rents have been historically lagging the turning points in the physical property market. Even though real interest rates remain negative and rents are still rising, these might very well be the last move. Put it in another way, inflation will come down if recession happens, and rents will come down subsequently as well, and they probably lag behind property prices for 1-2 quarters.

 

Given the vulnerability of the property market to liquidity shock as well as the meaningful risk of recession, I hereby reiterate my call on Hong Kong property market, which is the base case of 0-10% rise for the full-year, with the lower bound of the range more likely, implying a correction of 10% or more. I would also tentatively estimate that property prices may correct by at least 20-30% from here by the end of 2012. The risk for both year-end estimates lean towards the downside in my view, that means I believe that any correction bigger than that might be possible should the macro situation deteriorate more than currently expected.

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Still Another, and this one talks Mortgage rates

 

Rising Borrowing Costs in Hong Kong to Hurt Property Market: Analyst

 

Published: Tuesday, 20 Sep 2011

 

Mortgage rates in Hong Kong, which have jumped nearly 200 basis points (bps) over the last six months, could rise to as much as 4.5 percent by the end of 2012, according to Barclays Capital, making it much harder for first-time homebuyers to enter the market.

 

Already, the bank estimates that first-time buyers need to pay nearly 47 percent of their household income in mortgage payments. The rising rates are likely to stall new purchases as well as purchases from people wanting to upgrade, Andrew Lawrence, director of property research at Barclays Capital, told CNBC.

 

“People who have got existing mortgages are on a still relatively low rate, but if they should want to move today, they're now going to have to pay much higher mortgage rates, so that's going to be a massive disincentive for buyers,” Lawrence said.

 

Earlier this year, Barclays predicted that Hong Kong property prices could fall 25-30 percent by 2013. Lawrence said he’s sticking by that view and that rising mortgage rates will “take out much of the bubble since 2007.”

 

Lawrence believes depositors are shifting out of the Hong Kong dollar and into the Chinese yuan, largely as a result of the Federal Reserve’s policy of competitive devaluation of the U.S. dollar. According to him, that draining of Hong Kong dollar liquidity is driving up interest rates in the territory.

 

Lawrence said he expects a continued slow-down in transaction volume for Hong Kong’s property market. The number of sale and purchase agreements for all building units received in August decreased 56.6 percent compared with the same period last year, according to figures from the territory’s registry.

 

Government Policy

 

Last week, the Secretary for Development Carrie Lam announced that the government wouldn’t hold any land auctions between October and December due to falling demand from developers.

 

While some property analysts have interpreted the move as government support for the property market, Lawrence doesn’t agree.

 

“(The government) is still committed to the 20,000 private units that it expects to deliver, and we would not be surprised for the Chief Executive to announce that we're going to see increased land supply, but combined into a subsidized housing program,” Lawrence said.

 

He cautioned that an increase in land supply and a government policy towards ramping up subsidized housing would be negative for the city’s property developers.

 

The developers most vulnerable at the moment, according to Barclays, are Midland Realty [1200.HK 3.35 -0.08 (-2.33%)], Henderson Land [0012.HK 41.55 0.50 (+1.22%)] and Sino Land [0083.HK 11.65 0.12 (+1.04%)]. Barclays has an underweight rating on the first two developers and is neutral on the third.

 

http://www.cnbc.com/id/44589431

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(Posted by OffThePeak on AsiaXpat thread):

 

"HK Island will always be more expensive than NT. But now it's what, double as expensive? I think the difference will reduce in the future, as more people move from HK to NT, so they can live in bigger housing, have cleaner air, etc. This means that buying a flat in NT rather than HK island is a better investment."

 

You may be missing something important here - Proximity to high-paying jobs

 

Highly paid bankers and lawyers work long hours, and do not want to waste precious time commuting. That's why the price of a flat in the Hong Kong SAR tends to be in inverse relationship to its commuting time to Central.

 

And that is also why West Kowloon is gaining on Mid-levels - it is less crowded and closer.

=== UNQUOTE ===

 

/source: http://hongkong.asiaxpat.com/forums/hong-kong-property/threads/114098/hong-kong-property-prices/

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Lots of negatives around at the moment for HK property - most notably the IR rises, increasing land supply, developer's sales prices for new units and macro economic picture. I think we are due a HK policy announcement in mid October as part of the Chief Executive's address which will confirm which direction housing policy will now take. Given the recent cooling of the market I wonder whether the govt will take a back seat now with regard to any further cooling measures or even relax any of the measures to kick start the market again? In the absence of this it is difficult to see the market avoiding the duldrums for the rest of the year? I certainly don't think the govt will want to be seen as bringing down the market.

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Lots of negatives around at the moment for HK property - most notably the IR rises, increasing land supply, developer's sales prices for new units and macro economic picture. I think we are due a HK policy announcement in mid October as part of the Chief Executive's address which will confirm which direction housing policy will now take. Given the recent cooling of the market I wonder whether the govt will take a back seat now with regard to any further cooling measures or even relax any of the measures to kick start the market again? ...

That's possible.

 

From the AsiaXpat thread:

 

"property prices have slumped 8-10% all over hong kong. this is going to continue for the next few months."

 

We are in a "Buyer's Market" now, rather than the "Seller's Market" we saw 3-4 months ago. What's the difference? Buyer's are scarce, and those that do want to buy have plenty of supply to consider. The agent's job is a Buyers market, is to "talk down the Sellers" to a level a buyer is willing to pay. That means property tends to trade on the "Bid" side of a the Bid/Offer spread, because few buyers are willing to pay up, unless it is a special property. I reckon this will continue as long as the factors making the environment look negative continue.

 

What are those factors:

+ Banks have pushed up their spreads by almost 50 bp (0.50%),

+ The government has imposed severe limits on LTV lending percentages

+ The govt has imposed an "anti-speculation tax", taking the ST traders out

+ The govt has promised to flood the market with supply, to bring prices down

+ HK's Hang Seng index is in a bear market

+ Globally, there is a fear of a "double dip" or worse

+ China is slowing down and tightening credit

 

All these negative factors will not last forever, and I think they will fall away one by one. How far will the market slide? I can see 10-15% off the top, but I think predictions of a 25-30% slide may well be excessive.

 

I am seriously considering buying a small portfolio of HK Property stocks if the HSI falls to 15,000, where I would expect important support to reside. Those stocks are already anticipating a larger correction than we may see, and you can achieve dividend yields in the region of 5%. And that will go up, if the HSI falls to 15,000.

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Prices will now start to increase. I have sold my flats.

Were you happy with the prices achieved ?

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Centa-City Leading Index CCL

Latest release on 2011/09/30; prices from 2011/09/19 to 2011/09/25

[Centa-City Leading Index]------- 99.21 : +1.05 % from prior wk. : -0.20% pr.mo.

[Mass Centa-City Leading Index] 95.85 : +1.13 % " " -------- " " : +0.44%

=====

(Mid-Levels):

Robinson Place 14,277.56 : +2.37 %

Tregunter ----- 17,859.42 : - 0.12 %

Dynasty Court- 22,067.19 : - 0.12 %

Clovelly Court- 17,073.92 : +1.35 %

(West Kowloon):

The Waterfront 13,628.06 : - 0.93 %

Sorrento ------- 16,373.66 : +2.86 %

The Arch ------- 20,327.47 : - 4.62 %

Island Harbourv 9,232.64 : - 0.56 %

Park Ave. / CPark 10,432.82 : - 1.83 %

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West Kowloon is still outperforming

 

WKowl.png.jpg

 

WK is still at or above the level of early June, when the Centaline Index peaked. (This chart shows sales in the secondary market.)

 

"Has Mainland investment primarily affected new builds rather than the secondary market in this area?" - W-Up

 

Yes, I think that is right.

Some new properties, like Imperial Cullinan, have been effected by one or two "shockingly low" sales from Mainland-based sellers. But the secondary market remains firm, as the chart shows. (Some say that the initial Tower or two at IC were over-priced.)

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Hong Kong’s property-hoarding problem

Commentary: Hong Kong ‘occupied’ by absent landlordsStories You Might Like

 

HONG KONG (MarketWatch) — As Hong Kong’s chief executive delivered his farewell policy address last week, revelations about the extent of apartments lying empty in the territory grabbed the headlines, rather than a new subsidized-housing initiative.

 

Property stocks rallied on news that Donald Tsang said he would only be tinkering with the red-hot property market by restarting the suspended subsidized-home ownership program.

 

The fundamentals of property developers also got a fillip, as numbers contained in the address suggested that buying of apartments for investment now appears to easily outnumber the supply of all newly built apartments in Hong Kong.

 

This means worries about affordability, a potential recession in Hong Kong or even stricter mortgage rules can be ignored — the property market, it seems, is driven by investors who are so wealthy they don’t even bother to rent out their apartments.

 

To arrive at this assessment, you simply have to follow the numbers revealed in recent policy speeches.

 

Last week, after Tsang disclosed the number of apartments and households in Hong Kong, the data showed there were now 250,000 apartments uninhabited.

 

The rate at which unused apartments have been growing is particularly eye-catching, and they now appear to be completely swamping new supply.

 

Comparable government figures from the end of 2009 show there were effectively 210,000 uninhabited units. In little over a year and a half, this number has grown by 40,000.

 

It also dwarfs Hong Kong’s new supply, which Daiwa Securities calculated at only 13,405 residential units in 2010.

 

This even calls into question the government’s target of making available 20,000 units on average per year. On recent trends, this would not even keep up with the demand for property investment.

 

Perhaps not surprisingly, this period coincides with property and rental prices skyrocketing in Hong Kong. Prices are up around 70% since the Lehman crisis, and the majority of private residential tenants are facing upwards of 50% rental increases.

 

This revelation on empty apartments is likely to again put the scale of property purchases in Hong Kong by mainland Chinese in the spotlight.

 

The wasteful habit of leaving units lying empty coincides with a recent wave of mainland buying. One explanation is that cultural factors are at play, whereby mainlanders consider that once an apartment has been lived in, it is no longer new and thereby less desirable.

 

Others suggest the main motivation for this mainland buying in Hong Kong is primarily to get money discreetly offshore, rather than maximizing the value of the investment.

 

But there are also other policy factors driving money into Hong Kong. As the Chinese government has banned the purchase of multiple homes on the mainland to quell its own overheating property market, one unintended consequence is buying switches to Hong Kong, where there are no such restrictions.

 

/more: http://www.marketwatch.com/story/hong-kongs-property-hoarding-problem-2011-10-16?siteid=bigcharts&dist=bigcharts

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... from the AX thread...

 

Bing2. You said, "however, remember in 2008 when lehman collapsed? hong kong also had very solid internal property condition just like today's. but the market collapsed for 30% because of external problem from wall street meltdown. "

 

(Off The Peak replies):

 

Memories are short here !

 

There are important differences between now and the market in 2008 prior to the collapse.

 

They say that rents are a "lagging indicator", but that was not the case in 2008. Rents began to sag early in the year, while property prices held up (much as they are doing now.) In mid-2008, we owned multiple flats in Caribbean Coast Tung Chung. About the time of the Lehmans collapse, one of the agents was talking to me about the rental market, and he let slip that there were 300 vacant 3BR flats in CC. I must have turned white because he suddenly stopped talking. I then asked him, what was a normal number of vacant flats. He said, "usually about 100." I knew at that point that the market was in for some very tough times.

 

Within a few weeks, banks started cutting their valuations, and tightening their lending criteria. And Centaline's index started falling at 1-2% (or more!) per week. I hadn't lived in HK during a downturn before, so such a rapid descent was rather shocking - a 1% per month drop is a big deal in countries like the UK or the UK.

 

The rapid decline last only about 10-12 weeks, but it truly cleaned out the market. Does anyone here think we are set for that? The only thing that I think could do it would be a sharp jump in rates. Instead, I think there is some possibility that ratesmay come lower as we head into next year. By then, banks may find they have to compete for business and the spread widening that they have tried to make stick may start to fade. This seems to be a seasonal pattern.

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NAM CHEONG TENDER AT $11.8 Billion

 

SHKP has won the Nam Cheong Tender at a "lower than expected" price of $11.8 Billion - equiv to HK$4,538 per buildable sf.

 

Estimates had been at HK$13 Billion, or $5,000 psf, with the developer required to share 5% of net profits with the MTR Corp.

 

The 497,297 sf site has a residential gross floor area of 2.31 million sf, allowing for at least 3,313 flats, most of which will have a saleable area of under 538 sf. The site includes a commercial GFA of 297,732 sf, which must include a 10,764 sf kindergarten-cum-child care center.

 

Ultimate sales price is expected to be at least $8,000 psf

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Index : to10/23: %PrWk : %Previous Month

CCLI : $ 98.16 : - 0.37% : - 1.06 %

MMI : $ 94.60 : - 0.44% : - 1.30 %

====

H. K. : 107.48 : - 0.69% : - 2.23 %

KLN. : $93.27 : - 0.07% : - 1.76 %

NT- e : $92.51 : +0.14% : +0.25 %

NT-w : $77.37 : - 1.05% : - 0.10 %

====

(MidL) xx,xxx

Robin : 14,266 : ====== : - 0.08 % : Robinson Place

Tregu.: 17,845 : ====== : - 0.08 % : Tregunter

DynCt : 22,049 : ====== : - 0.08 % : Dynasty Court

Clo.Ct : 17,060 : ====== : - 0.08 % : Cloverly Court

====

(WestK) xx,xxx

Arch. : 21,532 : ====== : +5.93 % : The Arch

Sorr. : 15,884 : ====== : - 2.99 % : Sorrento

WtrF : 13,617 : ====== : - 0.08 % : The Waterfront

PkAC : 10,017 : ====== : - 3.99 % : Park Ave./ Cent. Park

IsHV : $9,170 : ====== : - 0.68 % : Island Harborview

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