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Hong Kong property outlook - and Data Base

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DrBubb,

 

I've been considering your idea of downsizing for some time. Not just as a strategic move, but also because the bigger properties are out of my range.

 

I did it already for my rental this past year (living in a tiny 675ft apartment) and will consider to buy something similar in size.

 

Still...with things going south in China... I'm very hesitant to buy anything.

 

For the past year I kept most of my money in cash on the bank. While everybody around me is telling me that I'm crazy to do that ( --> inflation ), those very same people have lost upwards of 10% this past year on the stock market.

 

I very much look forward to your extended post.

 

 

 

 

That's a good analysis, YellowTip.

 

I wonder how many will see it and comment?

 

I will give you two posts, in reaction to it: A quick one, and a Longer, more considered one.

 

My quick comment is:

========

Have you thought of downsizing?

That is, buying something, but maybe smaller and cheaper than you had before.

 

This way, if the market drops, you will have something to gain.

 

But if it keeps rising, you will not find youself left behind.

 

Cyclically, I think the market could have another 2-3 years, and maybe more.

And we haven't yet seen the "crazy blow-up phase" which normally marks a long cycle high.

That's why I suggest still owning something.

 

On the other hand, it is hard to see how HK will escape getting some sort of downturn,

if China and the global economy turn sour in 2013-14.

 

Where to buy, if you downsize, is a whole different discussion, and that is one I am

pondering myself right now.

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DrBubb,

 

I've been considering your idea of downsizing for some time. Not just as a strategic move, but also because the bigger properties are out of my range.

 

I did it already for my rental this past year (living in a tiny 675ft apartment) and will consider to buy something similar in size.

Another brief one - also posted on AX:

 

YT,

The size might suit you, but maybe not the location.

 

Nevertheless, I will suggest you look at Harbour Place in Hung Hom. You can pick up a 770 sf flat there at under HKD 8,000 psf.

 

The big feature is the SHKP clubhouse. Transport connections will improve in the future.

 

(This is one of the options that we have considered.)

=== ===

 

Because of its history, Harbour Place has appreciated little since its launch.

At current prices of $8,000 psf, I think it is fairlky valued, and maybe undervalued:

 

Formerly called Hung Hom Peninsula (Chinese: 紅灣半島) and built on the reclaimed land of Hung Hom Bay, it was an HOS estate comprising 2,470 flats completed by the Hong Kong government in 2002. Since the government decided to suspend the scheme, Hung Hom Peninsula was sold to Sun Hung Kai Properties and New World Development in February 2004. In November 2004, the developers decided to demolish and rebuild the buildings.

 

The environmentalists, legislators and citizens were worried about the waste pollution and strongly opposed the plan. One month later, due to public concerns, the developers decided not to demolish the buildings and renovate existing flats and upgrade facilities instead. In 2008, the extensive renovation and refurbishment of what was once a public housing estate into a luxury residential complex was completed and the flats were sold to the public.

 

/source: http://en.wikipedia.org/wiki/Harbour_Place

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Dr.B.

 

Thanks for the advice. I might just head over there during the weekend to have a look.

 

Just to share some quick feedback I received from my HK colleagues about this place:

  • They don't like it that much since it still has the old HOS image/stigma attached to it.
  • Also, they indicated that together with Whampoa, these are housing enclaves of companies like TATA (TCS) and Infosys who place their Indian staff there. (nothing wrong with that, but my HK colleagues market that as a negative)
  • Bus connections from that area to HK island and other parts of HK are actually very good.

 

First of all, I'm not sure about the accuracy of this information, but it could explain the lower than average price.

 

I was also considering to buy a small unit at Harbour Green. Prices there are around 10K/ft so, still within a reasonable price range. The nice thing about this place is that it has quick (and covered) access to the Olympic MTR station. That gets me to work in Central in about 20 minutes... without getting wet during the raining season.

 

If I remember correctly, you live next to the Imperial Cullinan development. How is that turning out to be? Our discussions a year ago concluded that it was a terrible location, tightly squeezed between OSS and TLB. Now that development is almost complete, do you still feel the same, or does it actually not look too bad? Secondary asking prices are between 13K and 15K/ft. You feel it's over priced?

 

Another brief one - also posted on AX:

 

YT,

The size might suit you, but maybe not the location.

 

Nevertheless, I will suggest you look at Harbour Place in Hung Hom. You can pick up a 770 sf flat there at under HKD 8,000 psf.

 

The big feature is the SHKP clubhouse. Transport connections will improve in the future.

 

(This is one of the options that we have considered.)

=== ===

 

Because of its history, Harbour Place has appreciated little since its launch.

At current prices of $8,000 psf, I think it is fairlky valued, and maybe undervalued:

 

Formerly called Hung Hom Peninsula (Chinese: 紅灣半島) and built on the reclaimed land of Hung Hom Bay, it was an HOS estate comprising 2,470 flats completed by the Hong Kong government in 2002. Since the government decided to suspend the scheme, Hung Hom Peninsula was sold to Sun Hung Kai Properties and New World Development in February 2004. In November 2004, the developers decided to demolish and rebuild the buildings.

 

The environmentalists, legislators and citizens were worried about the waste pollution and strongly opposed the plan. One month later, due to public concerns, the developers decided not to demolish the buildings and renovate existing flats and upgrade facilities instead. In 2008, the extensive renovation and refurbishment of what was once a public housing estate into a luxury residential complex was completed and the flats were sold to the public.

 

/source: http://en.wikipedia.org/wiki/Harbour_Place

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Dr.B.

 

Thanks for the advice. I might just head over there during the weekend to have a look.

 

Just to share some quick feedback I received from my HK colleagues about this place:

  • They don't like it that much since it still has the old HOS image/stigma attached to it.
  • Also, they indicated that together with Whampoa, these are housing enclaves of companies like TATA (TCS) and Infosys who place their Indian staff there. (nothing wrong with that, but my HK colleagues market that as a negative)
  • Bus connections from that area to HK island and other parts of HK are actually very good.

 

First of all, I'm not sure about the accuracy of this information, but it could explain the lower than average price.

 

I was also considering to buy a small unit at Harbour Green. Prices there are around 10K/ft so, still within a reasonable price range. The nice thing about this place is that it has quick (and covered) access to the Olympic MTR station. That gets me to work in Central in about 20 minutes... without getting wet during the raining season.

 

If I remember correctly, you live next to the Imperial Cullinan development. How is that turning out to be? Our discussions a year ago concluded that it was a terrible location, tightly squeezed between OSS and TLB. Now that development is almost complete, do you still feel the same, or does it actually not look too bad? Secondary asking prices are between 13K and 15K/ft. You feel it's over priced?

Thanks, YT

 

Interesting points on the Indian tenants at HP - it seems possible.

 

I am not rascist, but it is true that Indian tenants have a preference for spicy food, and when we rented flats to Indians in the past, there was often a strong smell in the flat afterwards, and that made it harder to rent and sell. So from a landlords point of view, that would be a negative. And I also know that Indian friends of our like Hung Hom, so maybe there is a bit of an enclave there. However, I have to say that in the two times I visited the (very nice clubhouse), I did not notice that pattern.

 

We are very keen on The Long Beach, where wer live, and I think it represents better value than Imperial Cullinan (certainly! given the much lower prices per sf at LB), and also better than Island Harbourview (it is a definite step up!) and Harbour Green (for the better flats here.) The rain may seem like a problem, but it is not in our view because it rains rarely, and there is a shuttlebus to the MTR which runs every 15 minutes - but is hardly needed. Also HG is surrounded by noise, and is not on the sea. I alao think the LB clubhouse can compare with any clubhouse in all of HK, so I don't think HG would be better.

 

Look for my PM

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Someone (here in Hong Kong) asked this question recently:

 

Does the Centaline Index accurately reflect Market prices ?

 

This is something I have been looking at recently, and I think it does. Specifically, if you wonder about how well movements in the Index are reflecting in price movements for individual areas, the answer I found is that prices all around HK correlate well with the Centaline index.

 

taikoo.png

 

This chart contains four indices, and is pretty busy, so I had better explain it.

 

We are looking at mostly monthly intervals since 2010, and let's start with the Blue line:

 

+ Blue: Centaline index multiplied by 100

(Example: July 29, 2012: 106.54 x 100 = $10,654 )

+ Red: Taikoo Shing : $10,689 psf (at 7/29/12)

+ Green: Park Avenue : $11,145 psf (7/29/12)

+ Yellow: Island Harbourview : $9,663 psf (7/29/12)

 

Not only was 100x the Index a good proxy for Per Square Foot prices in the main two developments, but each of those, Taikoo Shing and Park Avenue/Park Central correlate well with each other - I believe that they provide good benchmarks for Hong Kong Island and West Kowloon.

 

I find it a bit surprising to find the prices for these two are so close to each other. Taikoo Shing is an old area, with dated and rundown housing stock, in crowded conditions. By contrast, the buildings which comprize Park Avenue/Central Park in West Kowloon near Olympic station - Is much more modern, and feels much less crowded. It continues to surprise me that HK people pay such high prices for inferior housing stock just because it is on HK Island. The journey by MTR from Olympic station is actually a bit faster to HK Station, than from TKS to Central. (Having said that, there is then a 5-6 minutes walk from HK station to Central.)

 

Is that little walk really worth living in a 25 years older building? To me, it is not.

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Hong Kong's Fevered Property Market

 

According to a new report by Andrew Lawrence, head of Asia ex-Japan Real Estate for Barclay’s Capital in Hong Kong, the average deposit for a first-time buyer on a 400-square foot flat in the New Territories, well beyond the fashionable enclave on Hong Kong island itself, is 3.3 times the average annual income in the territory.

 

That was exactly where the market topped out in 1997. It is also exactly where the market topped out in September of 1980 and precipitated a fall in property that took it all the way down to below 1.25 times average income six years later, by March of 1986. It then took 13 years to climb back to its 1997 peak.

 

The market has reached these current heights at a time when stress is beginning to show in Hong Kong’s economy as the intensifying Eurozone crisis and the sharp slowdown over the border begin to take their toll

 

/more: http://asiasentinel.com/index.php?option=com_content&task=view&id=4791&Itemid=224

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I am thinking of selling one of my rentals. Given the long long run that we have had, the HKMA squeezing financing to 50%, and all this complainting about high property prices, it might just be time to take profits instead of seeing profits taken away.

 

It seems that it is a time when everyone are thinking property and this has driven prices to peak.

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Makes sense

 

There may be more upside, but prices are good today !

 

Property stocks, HSI ... update : hk1 : hk16 : hk10 : hk12 : hk13

 

bigi.gif

 

... as well as China stocks, all look cheaper than HK property

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It sure looks like it has this spikes when one goes into Centalines's price per sq.ft for selected areas of Hong Kong:

 

Shatin: http://hk.centadata.com/cci/estate_info_e.aspx?id=004600

Taikoo: http://hk.centadata.com/cci/estate_info_e.aspx?id=001600

NanFung: http://hk.centadata.com/cci/estate_info_e.aspx?id=001400

 

But, don't know what to think of QE3 which might be announced this Thursday or perhaps a coming QE from Europe. Either it is factored in or it will have an impact on prices.

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(This fits the 18 year Cycle rather well):

 

From today's SCMP:

 

Home Prices Will Soar to All Time High by 2014

 

Sales of Hong Kong's new homes could reach record highs -- yes, another record high -- over the next couple of years as developers accelerate releases of residential projects, according to a report in the South China Morning Post.

 

"We see the property up-cycle continuing until the end of 2014 at least," Lee Wee Liat, head of research at BNP Paribas Securities, said to the Post.

 

"Primary-market transaction volumes should remain strong over the next two years, possibly hitting historical highs of 15,000 units and HK$150 billion in each of 2013 and 2014."

 

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Lee expects the number of deals in the primary market to reach 13,000 this year with a total value of HK$136 billion, compared to 10,501 deals last year at a total value of HK$133.32 billion.

 

He predicted that home prices would grow another 10 to 15 percent by the time 2014 rolls around.

 

"Developers with the most projects available for sale can capitalise on high property prices will outperform," he said.

 

Agents identified Cheung Kong as a likely outperformer, noting that it had more than 5,300 apartments available for sale until next year.

 

Its major projects include City Point, at West Rail's Tsuen Wan West station, and Lohas phase three in Tseung Kwan O. It was expected to achieve sales revenue of about HK$50 billion if all units were sold, agents said.

 

Cusson Leung, an analyst at Swiss-based investment bank Credit Suisse, said developers would now focus on the primary market.

 

"They are becoming more flexible on pricing and focusing more on asset turnover, and buying power will be absorbed by all the attention on primary projects," he said.

 

Sun Hung Kai Properties co-chairman Thomas Kwok Ping-kwong said last week the group would not hoard its supply of new flats.

 

"We will put the new projects up for sale once we secure pre-sale consent from the government," he said after the company's final result announcement last week.

 

Victor Lui Ting, deputy managing director, said SHKP planned to release HK$35 billion worth of units for pre-sale for the year ended June next year.

 

Henderson Land and New World are also likely to release more projects from now to next year, compared with their launch programme this year.

 

Lee said the key focus would be on their two joint-venture projects, the 928-unit Double Cove phase one at Ma On Shan and the 2,580-unit The Reach at Tai Tong Road in Yuen Long. More than 400 units at Double Cove phase one have been sold this month. Henderson Land Development also would start to see returns from its redevelopment projects, with five potential launches this year and six next year, Lee said.

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Hong Kong property outlook - and Data Base

 

 

Hi all, Kung Hei Fat Choi!

 

I have followed with interest for some time now, the excellent information this site gives. A lot of us appreciate the time Dr Bubb in particular, takes to share his knowledge and expertise.

 

I was hoping Dr Bubb and others could share some recent opinions on the state of the HK housing market and how the new government anti-speculative measures will impact the market long term. I'm looking at buying in Tung Chung at the moment but am cautious in being sucked into buying high in the cycle. Tung Chung has many positives (low vacancy/ new hospital/ macau bridge/ new airport construction projects, etc) but I guess there's risks to the world economy that may change things.

 

Caribbean Coast centadata link -- http://hk.centadata.com/cci/cci_e.htm

 

In other posts on this site (especially UK discussions), I have seen various diagrams depicting the way and timing of cycles. Where would you describe HK's current status on the cycle? Is it time to wait for a correction? Seems a long way off with cashed up citizens and record low interest rates.

 

2icboki.gif

 

Look forward to generating fresh HK discussion here and also contributing further. Thanks!

= = =

DATABANK

 

Week : CCLI : CMMI : RobinPl: Tregun : Dynast: Clovell // IslHarb : ParkA : Waterf : Sorrent : TArch : C'ribC : TaikSh.

====

09/30: 110.14 108.55: 14,400 : 19,246 : 22,623 : 21,652/ 10,018 : 10,804 : 12,341 : 15,017 : 20,620 : 5,657 : 11,485

09/23: 109,81 107.88: 14,478 : 19,348 : 22,745 : 21,770/ 10,099 : 10,892 : 12,809 : 15,602 : 21,015 : 5,628 : 10,700

09/16: 108.17 106.05: 14,340 : 19,164 : 22,528 : 21,563/ 10,089 : 10,880 : 12,784 : 15,572 : 20,975 : 5,556 : 10,262

09/09: 108.80 107.02: 14,343 : 19,169 : 22,534 : 21,568 // 9,976 : 10,785 : 11,176 : 15,506 : 19,828 : 5,498 : 10,578

09/02: 107.99 105.85: 14,360 : 19,191 : 22,559 : 18,625 // 9,952 : 10,837 : 11,891 : 16,102 : 19,822 : 5,561 : 10,582

08/26: 106.89 105.17: 14,324 : 19,144 : 22,504 : 18,580 // 9,622 : 11,021 : 11,811 : 15,995 : 22,319 : 5,404 : 10,538

08/19: 107.18 105.22: 14,342 : 19,168 : 22,532 : 18,603 // 9,671 : 10,741 : 12,197 : 16,052 : 22,612 : 5,447 : 10,893

08/12: 106.85 104.85: 14,311 : 19,126 : 22,483 : 18,563 // 9,638 : 10,815 : 12,324 : 16,031 : 22,582 : 5,412 : 10,292

08/05: 105.78 103.33: 14,313 : 19,128 : 22,486 : 18,565 // 9,659 : 10,988 : 12,822 : 16,052 : 22,612 : 5,162 : 10,208

07/29: 106.54 103.71: 14,375 : 19,212 : 22,584 : 18,646 // 9,663 : 11,145 : 12,879 : 16,123 : 20,313 : 5,345 : 10,689

07/22: 104.93 101.99: 14,275 : 19,978 : 22,426 : 18,516 // 9,362 : 11,096 : 12,831 : 16,063 : 20,124 : 5,123 : 10,211

07/15: 104.25 101.41: 12,156 : 19,067 : 22,414 : 18,506 // 9,247 : 10,960 : 12,759 : 15,974 : 20,011 : 5,114 : 10,061

07/08: 105.01 102.33: 12,511 : 19,078 : 22,427 : 18,516 // 9,262 : 10,978 : 12,772 : 15,990 : 20,031 : 5,031 : 10,759

07/01: 105.46 103.13: 12,586 : 19,193 : 22,562 : 18,628 // 9,300 : 10,976 : 12,762 : 15,491 : 20,569 : 5,179 : 10,518

06/24: 104.60 102.33: 12,489 : 19,045 : 22,387 : 18,484 // 9,241 : 10,906 : 12,712 : 15,430 : 20,487 : 5,185 : 10,546

06/17: 104.14 102.01: 12,435 : 18,963 : 22,291 : 18,404 // 9,232 : 10,896 : 12,686 : 15,399 : 18,599 : 5,110 : 10,530

06/10: 103.82 101.35: 12,457 : 18,997 : 22,330 : 18,437 // 9,225 : 10,589 : 12,699 : 15,415 : 18,618 : 5,070 : 10,185

06/03: 104.01 101.85: 12,455 : 18,993 : 22,326 : 18,433 // 9,252 : 10,620 : 12,686 : 15,398 : 18,598 : 5,205 : 11,093

05/27: 104.00 101.72: 13,777 : 19,733 : 22,334 : 18,440 // 9,643 : 10,710 : 12,740 : 15,465 : 18,678 : 5,253 : 10,659

05/20: 103.94 101.89: 13,697 : 18,052 : 22,306 : 18,416: 10,004 : 10,404 : 12,716 : 15,435 : 18,642 : 5,137 : 10,877

05/13: 103.35 101.46: 13,698 : 17,972 : 22,206 : 18,334 // 9,798 : 10,367 : 12,401 : 15,314 : 17,941 : 5,083 : 10,186

05/06: 102.89 101.40: 13,588 : 17,828 : 22,028 : 18,187 // 9,967 : 10,532 : 12,295 : 14,219 : 17,491 : 5,013 : 10,719

04/29: 101.12: 98.90 : 13,579 : 17,815 : 22,012 : 17,031 // 9,841 : $9,904 : 11,634 : 14,648 : 17,423 : 5,054 : : 9,922

04/22: 102.17 100.05: 13.644 : 17.901 : 22,118 : 17,113 // 9,793 : 10,022 : 11,636 : 14,651 : 17,426 : 5,221 : 10,663

04/15: 102.50 100.71: 13,610 : 17,856 : 22,064 : 17,856 // 9,390 : 10,442 : 11,661 : 14,682 : 17,463 : 5,017 : 10,886

04/08: 101.79: 99.76 : 13,800 : 17,866 : 22,075 : 17,080 // 9,493 : 10,477 : 11,668 : 15,102 : 17,473 : 4,865 : 10,581

04/01: 101.17: 99.15 : 13,795 : 17,860 : 22,067 : 17,074 // 9,550 : 10,401 : 11,641 : 14,441 : 18,548 : 4,871 : 10.384

03/25: 100.06: 97.97 : 13,723 : 17,766 : 21,952 : 16,985 // 9,296 : 10,105 : 11,346 : 13,907 : 18,359 : 4,926 : 10,373

03/18 : 99.17 : 96.75 : 12,738 : 17,747 : 21,928 : 16,966 // 9,230 : 10,160 : 11,380 : 13,949 : 18,414 : 4,766 : : 9,850

03/11 : 98.41 : 95.72 : 12,691 : 17,682 : 21,848 : 16,904 // 9,165 : 10,089 : 11,358 : 15,071 : 19,152 : 4,736 : : 9,615

03/04 : 96.69 : 94.28 : 11,591 : 17,531 : 21,662 : 16,760 // 9,029 : $9,937 : 11,244 : 14,269 : 18,960 : 4,751 : : 9,728

02/26 : 95.15 : 93.14 : 11,515 : 17,416 : 21,520 : 16,650 // 8,449 : $9,638 : 11,145 : 13,031 : 21,504 : 4,808 : : 9,702

02/19 : 94.38 : 92.10 : 11,515 : 17,416 : 21,520 : 16,650 // 8,580 : $9,784 : 11,160 : 13,048 : 20,058 : 4,770 : : 9,499

02/12 : 95.01 : 92.68 : 13,132 : 17,364 : 21,455 : 16,600 // 8,659 : $9,874 : 11,210 : 13,107 : 20,148 : 4,768 : 10,038

02/05 : 95.04 : 92,63 : 13,988 : 17,384 : 21,481 : 16,620 // 8,576 : $9,779 : 11,185 : 13,078 : 20,103 : 4,790 : : 9,873

01/29 : 94.47 : 91.91 : 13,981 : 17,377 : 21,471 : 16,613 // 8,770 : $9,663 : 11,145 : 13,031 : 20,031 : 4,730 : : 9,884

01/22 : 94.75 : 92.17 : 13,994 : 17,392 : 21,490 : 16,627 // 8,762 : $9,654 : 11,152 : 13,039 : 20,043 : 4,871 : : 9,875

01/15 : 94.31 : 91.66 : 13,986 : 17,383 : 21,478 : 16,618 // 8,762 : $9,655 : 11,146 : 13,032 : 20,032 : 4,667 : : 9,864

01/08 : 94.16 : 91.25 : 14,014 : 17,417 : 21,520 : 16,651 // 8,780 : $9,674 : 12,250 : 13,060 : 20,075 : 4,630 : : 9,295

01/01 : 95.47 : 92.41 : 14,080 : 17,499 : 21,622 : 16,729 // 9,135 : 10,399 : 12,435 : 13,257 : 20,378 : 4,631 : : 9,160

12/25 : 96.68 : 93.89 : 14,091 : 17,513 : 21,639 : 16,743 // 9,100 : 10,147 : 12,431 : 13,252 : 20,371 : 4,610 : : 9,877

12/18 : 96.81 : 94.03 : 14,104 : 17,529 : 21,659 : 16,758 // 9,109 : 10,157 : 12,436 : 13,258 : 20,379 : 4,620 : : 9,882

12/11 : 97.10 : 94.37 : 14,128 : 17,560 : 21,697 : 16,787 // 8,950 : $9,980 : 12,379 : 13,196 : 20,285 : 4,619 : 10,357

12/04 : 98.13 : 94.30 : 14,189 : 17,635 : 21,790 : 16,859 // 9,016 : 10,054 : 12,435 : 13,257 : 20,131 : 4,834 : 10,379

 

Historical Data : http://202.72.14.52/...rchHistory.aspx

 

63627550.png

OTHER LINKS

AXpat Forum :: http://hongkong.asia...-kong-property/

Cental-Data :: http://hk.centadata.com/cci/cci_e.htm

Show Flats- :: http://www.gohome.co...ew-property/en/

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NEW HK TAX - May have an impact on London Property prices

===========

 

(A very recent Skype conversation):

 

A: it looks like I will be stuck with my HK property for a while

B: How come?

A: the HK govt pulled a fast one yesterday

B: what's that?

A: they imposed a 15% tax on Non residents who buy here. it will drive prices down somewhat, at least new ones.

B: Surely they have to give warning first

 

A: they anounced it yesterday at 6pm, and mainland chinese bought hundreds of flats before it took effect at midnight

B: Bloody hell

A: London should do something like that

B: They won't

A: they dont have the guts

B: Mind you they are attacking London property. I think now is a terrible time to buy

A: this HK govt has guts and discipline, like Chinese people do

 

B: No stock at all...

A: tough love comes with the territory - In the West, we've lost the will to act like the Chinese do... No stock?

B: No stock of houses for sale

I'm saying now is a bad time to buy in London. There is nothing for sale. It is driving prices higher

 

A: There's plenty, plenty, plenty - with more coming. Its all being sold here in Hong Kong

Do you know how many overpriced new properties are being marketed here now??*

 

B: But I don't want a new property. I hate them

A: the new tax will drive prices in HK lower, and hit London property sales here - but I doubt that agents and developers from the UK have figured that out yet !

A: You dont need new - But if the new supply gets tossed into the London market, rather than here, it will drive all London prices lower

 

B: But stuff around the 1 million range is immune ... at present. Only thing that will kill it is higher rates

A: There's a fantastic amount of new supply coming, and they hope to sell much of it here

B: That's several years away. The Chinese all buy new property in London then send their kids to uni here

A: They are offering it here now: off plan. Do you have any idea how many London properties come thru here?

=======

 

*Just this weekend, there are three major London Properties being marketed here:

 

 

+ Fitzrovia collection: Newly refurbished: 2-3BR, from GBP 500k, ave.: GBP1,500 psf

+ Fitzroy Place occupies an entire city block in Fitzrovia; studio: GBP 800k, GBP2,000 psf / completion: late 2014

+ ??? New Tower in Spitalfields area (2 years away)

 

We see these overpriced properties : 2, 3, or 4 new ones each week here, and they get more & more expensive.

If price here Dip (thanks to this new tax), HK people may shift their buying back to HK, and leave the London developers high &dry

 

THE NEWS / Link: http://www.thestanda...5&icid=a&d_str=

 

... how it is being reported ...

 

A surprise property tax hit home as fast as it came - within 24 hours of the introduction of a higher stamp duty, people were shunning flat sales across the city.

 

Ministers rallied behind the tax and other new measures. They expressed confidence they would cool Hong Kong's super-hot property market; if not, they had plenty more initiatives "up their sleeves", one said.

 

The measures came into effect at midnight on Friday, just hours after Financial Secretary John Tsang Chun-wah had announced them.

He imposed a 15 per cent stamp duty on home purchases by non-permanent residents and companies, extended the special stamp duty on quick resales and raised the rates for the duty.

 

In less than six hours, buyers snapped up 100 flats at a Yuen Long development to beat the new stamp duty on buyers.

 

Secretary for Development Paul Chan Mo-po said on radio that the government needed to act swiftly. He dismissed concerns the measures would affect the city's competitiveness, saying they were aimed at tackling a fast inflow of hot money. "We have to react to the market. For things coming fast and fiercely, our measures have to be [launched] faster, more fiercely and accurately," Chan said.

 

The government raised by 5 percentage points the rate at which it levies the special stamp duty on sellers introduced two years ago to curb speculation, and extended its effect on resales from two to three years. The rates now range from 10 to 20 per cent.

 

On another radio show, Secretary for Transport and Housing Professor Anthony Cheung Bing-leung said that without new initiatives, the property bubble could burst, dealing a serious blow to livelihoods.

Chan expects prices to drop by 10 to 20 per cent.

 

/source: http://www.scmp.com/...-home-hong-kong

 

Personally, I do not think it will impact as much as that on secondhand prices here:

(1)

Most will not want to sell... and will try to wait it out.

But the developers HAVE TO SELL, and so this new tax will narrow the huge premium of new flats over secondhand. And will also reduce the appetite of developers to buy new land

(2)

It was the most obvious POLITICALLY ACCEPTABLE measure:

"HK Property for HK people"... and why not ?

I can understand it, even though it may cost me money. But as I have said, I think it will impact mainly on new properties, where the premium-to-secondhand has become ridiculously high

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I suspect this has been in preparation for close to a month now. A possible reason for the sudden introduction is due to the hot money that was coming into Hong Kong. They Hong Kong government was intervening in the market to sell HKD for foregin currency. It is coincidental that the banks have been pushing for huge no secured loans. I have been offered close to HK$1 million ($0.8m to be more exact) by several banks. The money appears to have arrived these two weeks and the governmen noticed the large influx and was scared of what the money could do. Of course, some of this money is not necessarily from China, but they see that something (money) came into Hong Kong. Obviously, the reaction was fear of prices continuing to go up. John Tsang did mention QE3 which supports that it was US printing of money rather than Chinese. So money came in to HK via the US banking system. Chinese and Hong Kong get increases in credit. Interestingly, it appears that the Chinese buyers are being blamed.

 

I am not sure if this will suppress prices. My guess is that it creates a damper that slowers sudden rises in prices because it creates a tax on quick sales and extends the holding period. Notice it times it to 2015 when QE3 is to keep interests low. Property prices tend to be sticky. People just hang onto it until the cost of supporting it becomes overwhelming. Furthermore, a low interest environment makes it "logical" for folks to buy than to rent. Anyone renting is sure to face a landlord that continuously increases the rent. This usually continues even into increasing interest rate environment until owners can no longer increase rents. At this point, owners start to sell. For me, I feel nothing when the rents are covering all the expenses and there is positive cash flow. So unless interest rates increase (2015), I would not feel the pain. However, the smart selling has to happen before this point in time be the stampede occurs.

 

My guess is that some of this does hurt the local buyers (HK permanent residents). It was just last week that noticed and overheard a couple who was signing a purchase for a second property at McDonalds. It is usually the local folks who a last into the market and purchase at high prices. I also know a few Taiwnese folks who have been playing the HK market for more than 20 years. They were in early and exited last year. The point is that the smart money came in early and it is the not so smart money that arrived late. This not so smart money are usually the hardworking local resident who try to make ends meet.

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(Post from AX)

 

E---, I saw your comment:

"For purchase, asking prices have come down 5-10% from last week. The agents I was working with have already called me to see if I'm still interested.."

=======

 

I don't believe the prices are down 5-10% at all, and would be interested in hearing any specific information on that.

 

I think you might get a few sales at lower prices, and then once the panic sellers are done prices will creep back up over the next few weeks. (I have said this about a previous quick drop, and my supposition proved correct, so it may be right again.)

 

Here are the main reasons I do not expect an enduring price drop:

 

+ The new tax only impacts on a tiny percentage of the buyers for secondhand flats (maybe 10%)

 

+ I have spoken with some agents, and they are telling me that very few sellers are cutting prices. What has happened is buyers ahve pulled back their bids, and are waiting to see if prices will fall

 

+ Interest rates are low, and with money flooding into HK rates could actually dip lower

 

hkrentsep12.jpg

 

HERE's the BIG ONE (not yet mentioned here):

+ RENTS ARE STILL RISING FAST (look at the chart in Wed's SCMP):

Average rents for 100 estates, up from maybe $19.60 psf perhaps six months ago, to about $22.90 now - that's a 16.8% rise.

 

Why should anyone sell while rates are low and rents are rising ??

 

The phony drop will be ending soon, within a few weeks IMHO, unless rents fall or rates rise.

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Prices in West Kowloon have lagged the General indices

 

Chart

http://img24.imagesh...kpersfsep12.jpg

 

They are no higher than 12 months ago, and I am not sure why

 

It might have something to do with the pricing level, versus cheaper flats in the NT, etc.

Or maybe they rose too fast into the launch of (overpriced Imperial Cullinan) a year ago.

 

Whatever the reason, I think WK is an area that now provides good value-for-money

 

I see many more Expats moving in recently, especially young couples.

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From South China Morning Post;

 

 

"A buyer has paid HK$68,083 per square foot for a luxury flat at Opus Hong Kong, the new Frank Gehry-designed residential building in Mid-Levels East, a record for an apartment in Hong Kong and Asia in terms of price per square foot.

 

Data from the Lands Registry show the flat, on the 9th floor of the building at 53 Stubbs Road, was sold for HK$455 million on October 17, nine days before the government announced measures to curb property speculation. There is no information on the buyer.

 

The 6,683 sq ft flat offers a view of the city and Victoria Harbour.

 

The price beat the previous record, set by a duplex flat at 39 Conduit Road in Mid-Levels West, which sold for HK$360.7 million, or HK$63,999 per sq ft in April last year.

 

Ricky Poon, executive director of Colliers International's residential sales department, believes the buyer was willing to pay a record-breaking price because there is a lack of flats bigger than 6,000 sq ft and it is the latest luxury development in the city.

 

The price is almost 6 per cent higher than that paid for a flat on the 8th floor at Opus Hong Kong, which sold for HK$430 million or HK$63,657 per sq ft in August.

 

The 12-storey Opus Hong Kong, developed by Swire Properties, provides 10 flats and two double-level garden apartments with private swimming pools. The flats are 6,000 to 6,900 sq ft. Gehry's previous designs include the Guggenheim Museum in Spain and the Walt Disney Concert Hall in Los Angeles.

 

Despite the luxury residential market taking a hit from the government's new measures since the record-breaking deal was signed, Poon said he did not expect the buyer to cancel. "I don't think Swire would cut their asking prices for the remaining flats. They would rather keep the flats for leasing. And luxury residential prices have dropped a few per cent only and the buyer did not need to pay the new buyer's stamp duty and new rate of special stamp duty," he said."

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What are your thoughts on the HK property market? I was there just last week and the prices and rents seem absolutely insane. While this may persist in the short term, what are your thoughts on where price/rent levels are compared to what might be considered long term sustainable levels?

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Yes, prices are very high on a Global basis, but not quite the highest:

 

MOST EXPENSIVE CITIES

For buying a 1,292 sq ft Luxury flat

 

Location- : USD psf : HKD psf

Monaco-- : $ 4,864 : $37,696

London-- : $ 2,396 : $18,569

HK Island : $ 1,893 : $14,671

Paris----- : $ 1,843 : $14,282

Moscow-- : $ 1,632 : $12,648

 

source: Global Property Guide

====

 

Compared to these other cities, HK has:

+ Lower taxes

+ Lower interest rates

+ Better rates of wealth creation

+ More limited supply

 

The HK govt now wants to bring down the high prices, and they may succeed, if they make enough cheap land available, and/or some sort of shock in the global economy arrives

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BUYERS STAMP TAX - The impact so far

 

In reaction to a comment:

"OTP, you seriously believe in these numbers?? especially week to week up and down on particular estate..."

 

... THIS was posted:

 

I believe them if I have enough data to look at - and it "makes sense" in relation to my overall understanding of market dynamics.

 

One week's figure for a particular estate may not have much meaning. But the Olympic area is undervalued IMHO, and the resilience here may be confirming that people are recognizing that.

 

Even E-- MOVED to Long Beach recently. I don't think he did that because he thought prices were overvalued.

 

And there are enough transactions for Kowloon as a whole to suggest it is holding up better than the rest of the SAR - so far, at least

 

I don't follow The Belchers, so I cannot say anything intelligent about the 8% price drop there over the last month.

 

But the estates that I do follow show more strength in West Kowloon than in Mid-levels since the BSD was announced. I'm not sure why, since you might have thought that WK was driven by mainland buyers. Perhaps it shows the preference of local residents, rather than Expats:

 

Week : CCLI : CMMI : RobinPl: Tregun : Dynast: Clovell // IslHarb : ParkA : Waterf : Sorrent : TArch : C'ribC : TaikSh.

====

11/25: 115.05 113.11: 16,570 : 19,594 : 23,865 : 22,227 / 10,293 : 11,749 : 13,633 : 17,853 : 22,286 : 6,042 : 11,590

11/18: 116.17 114.32: 16,597 : 19,626 : 23,904 : 22,264 // 9,815 : 11,584 : 13,602 : 17,811 : 22,234 : 6,198 : 11,695

11/11: 116.81 114.20: 16,717 : 19,768 : 25,410 : 22,424 // 9,984 : 11,784 : 14,531 : 16,714 : 22,466 : 6,361 : 11,528

11/04: 116.07 113.81: 16,666 : 19,708 : 23,167 : 22,356 // 9,975 : 11,646 : 12,887 : 16,680 : 22,420 : 6,194 : 10,911

10/28: 114.35 112.33: 16,564 : 19,587 : 23,025 : 22,039 // 9,925 : 10,805 : 12,736 : 15,744 : 22,906 : 6,137 : 11,461

10/21: 112.25 110.37: 16,336 : 19,318 : 22,708 : 21,735 // 9,864 : 10,738 : 12,649 : 15,583 : 23,432 : 6,146 : 11,317

======

Note: 15% BSD on Non-residents was introduced, with effect from 27 Oct. 2012

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gdep,

Your:

"OTP, you seriously believe in these numbers?? especially week to week up and down on particular estate..."

 

I believe them if I have enough data to look at - and it "makes sense" in relation to my overall understanding of market dynamics.

 

One week's figure for a particular estate may not have much meaning. But the Olympic area is undervalued IMHO, and the resilience here may be confirming that people are recognizing that.

 

Even Elsdon MOVED to Long Beach recently. I don't think he did that because he thought prices were overvalued.

 

And there are enough transactions for Kowloon as a whole to suggest it is holding up better than the rest of the SAR - so far, at least

 

I don't follow The Belchers, so I cannot say anything intelligent about the 8% price drop there over the last month.

 

But the estates that I do follow show more strength in West Kowloon than in Mid-levels since the BSD was announced. I'm not sure why, since you might have thought that WK was driven by mainland buyers. Perhaps it shows the preference of local residents, rather than Expats:

 

Week : CCLI : CMMI : RobinPl: Tregun : Dynast: Clovell // IslHarb : ParkA : Waterf : Sorrent : TArch : C'ribC : TaikSh.

====

11/25: 115.05 113.11: 16,570 : 19,594 : 23,865 : 22,227 / 10,293 : 11,749 : 13,633 : 17,853 : 22,286 : 6,042 : 11,590

11/18: 116.17 114.32: 16,597 : 19,626 : 23,904 : 22,264 // 9,815 : 11,584 : 13,602 : 17,811 : 22,234 : 6,198 : 11,695

11/11: 116.81 114.20: 16,717 : 19,768 : 25,410 : 22,424 // 9,984 : 11,784 : 14,531 : 16,714 : 22,466 : 6,361 : 11,528

11/04: 116.07 113.81: 16,666 : 19,708 : 23,167 : 22,356 // 9,975 : 11,646 : 12,887 : 16,680 : 22,420 : 6,194 : 10,911

10/28: 114.35 112.33: 16,564 : 19,587 : 23,025 : 22,039 // 9,925 : 10,805 : 12,736 : 15,744 : 22,906 : 6,137 : 11,461

10/21: 112.25 110.37: 16,336 : 19,318 : 22,708 : 21,735 // 9,864 : 10,738 : 12,649 : 15,583 : 23,432 : 6,146 : 11,317

======

Note: 15% BSD on Non-residents was introduced, with effect from 27 Oct. 2012

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Hong Kong Island - The Tarnished "blue chip" location

 

 

AREA----- : Latest : PrevWeek : PrevMonth

HK-------- : 119.86 : - 2.79 % : - 2.44 %

KLN------ : 114.48 : +0.66 % : - 0.25 %

NT (East): 111.72 : +1.35 % : - 1.02 %

NT(West)- : 95.53 : - 0.29 % : - 0.69 %

 

===

/see- 12/02/12: http://hk.centadata.com/cci/cci_e.htm

 

What was that line from King Lear? :

"Being weak, seem so"

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The comparison between HK and Paris you posted on 21 November is interesting. Similar prices but:

 

- one location is in a thriving economy with low taxation, a rapidly growing and supportive neighbour, a hard working and growing population, very low unempoyment, a sound banking system, a stable currency and an absence of anti-landlord laws and regulations

- the other is in France

 

Which one would you expect to do better over the longer term?

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France could sort itself out, and China could submerge into a recession caused by mal-investments.

 

But if these things do not happen, the likely winner is obvious

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Mainland buyers are bailing out

 

The number of mainlanders purchasing HK flats has plunged by more than 90 percent within a month of the Buyers Stamp Duty (BSD) being implemented.

 

But they still account for a huge majority of BSD transactions - Only 25 have been recorded:

 

+ Most of the 15 primary flats sold under BSD

+ 9 out of 10 of the secondary flats (the other was bought by a Singaporean)

 

"A tax of 15% is already very high. I cannot believe they will increase it."

- per The Standard

 

Actually, it is choking the highend so badly, I think they will cap it.

Maybe something like: The higher of:

+ HK$1.5 million, or

+ 5% of the price

Whichever is higher.

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