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Hong Kong property outlook - and Data Base


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Yep, but I'm still waiting for values to become sufficiently attractive to buy again :-(

It could be a long wait.

 

CY has made his point, that he is willing to clobber Mainlanders. He needed to do that, to get his "cred" back

 

Now he needs to find a way to get Mainlanders buying the expensive flats again.

I think he will Cap the tax, maybe something like I suggested above

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WHAT DOES THE DATA SHOW ??

========

 

The increase for 2012 (year to date) was big, about 20%

but so was the increase in rents (maybe 18%?)

 

The other thing for 2013 was that cheaper properties tended to rise more in price than expensive ones...

=====

 

Week : CCLI : CMMI : RobinPl: Dynast: TaikSh // IslHarb : ParkA : Sorrent : TArch : C'ribC :

====

(2012)

12/16: 114.97 113.50: 14,072 : 23,840 : 11,288 / 10,527 : 11,733 : 16,319 : 22,193 : 5,988

(2011)

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

======

Chg +18.9%:+20.9% :-0.13% :+10.2% :+14.3%/+15.7%:+15.6%:+23.1%:+8.9%:+29.9%

 

Question: Why did Robinson Place go nowhere ?

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  • 2 weeks later...

(1)

2012: When Car Parks became cash shelters

 

The Buyer's stamp duty touched off a mania for parking spaces, but now investors may find it hard navigating their way to a speculative exit

 

"Investors bought properties such as car parks without serious consideration. Now the negative impact is starting to be exposed."

 

According to some reports, investors who bought car parking spaces from developers now find it difficult to resell the properties.

 

"Today returns on office properties are pretty low. Once interest rates go up, they will get into trouble."

 

- Todays SCMP, Business: pg.2

 

 

(2)

A WORD TO TO WISE

 

... or actually a quote, from pg.7 of LuxeHomes (Ask the Expert, Jeffery Ng Chong-yip)

 

"The risk of investing in car park spaces is connected to the economy. In good times, a couple with high disposable income may want to own a car. But the car is usually the first thing to be abandoned in bad times."

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(1)

2012: When Car Parks became cash shelters

 

The Buyer's stamp duty touched off a mania for parking spaces, but now investors may find it hard navigating their way to a speculative exit

 

"Investors bought properties such as car parks without serious consideration. Now the negative impact is starting to be exposed."

 

According to some reports, investors who bought car parking spaces from developers now find it difficult to resell the properties.

 

"Today returns on office properties are pretty low. Once interest rates go up, they will get into trouble."

 

- Todays SCMP, Business: pg.2

 

 

(2)

A WORD TO TO WISE

 

... or actually a quote, from pg.7 of LuxeHomes (Ask the Expert, Jeffery Ng Chong-yip)

 

"The risk of investing in car park spaces is connected to the economy. In good times, a couple with high disposable income may want to own a car. But the car is usually the first thing to be abandoned in bad times."

 

 

My limited personal experience is that individual car parks in residential buildings in Hong Kong are a monumental pain in the neck to rent out (not that I would expect too many of the punters buying them to be much concerned about income).

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I think the recent wave of buyers, may produce many who regret their purchases

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Henderson Land considers building HK$1mn flats

(story in today's SCMP)

 

Chairman SK Lee is considering building $1 million flats in the NT - but he needs the government to waive the Land premiums, so he can build on (cheap) abandoned farmland. (Hey, where's the food going to come from in HK's future?)

 

Meantime, his company is now selling 286 - 433 sf flats at more than HK$22,000 per sf, net. So one wonders how large these $1 mn flats will be.

===

 

-OTP on AX : http://hongkong.asiaxpat.com/forums/hong-kong-property/threads/149807/$1mn-flats-coming-to-hong-kong?/

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(From OTP):

 

The SCMP article today on Property Launches... er, ah Sucks.

("Flat launches set to give market a boost")

 

Here's what they should have said:

 

+ the 15% BSD is hitting New flats more than the secondhand market, because developers have to sell, while owners of secondhand can JUST WAIT, especially owner occupiers, or those with tenants in their investment flats. And new flats in HK have been overpriced for a long time, the premium to secondhand can be 10-20%, and that's too high

 

+ SHKP recognised this reality, and has priced its flats at Wings-2 accordingly, and a price which is competitive with the secondhand market. In fact, the sales of these new properties may force the secondhand market lower, as fresh supply (at competitive prices) SHOULD do. Take out the car park, and consider the other discounts, then the Wings-2 North facing properties were priced at HKD 8,100-8,900 per sf (Gross), depending on the floor, with the lower price being the 6th floor.

 

+ One West Kowloon is not selling well because it is not in West Kowloon. It is in Sham Shui Po, next to the "Four Little Dragons." In fact, they should have called the property: "One (Mile from) West Kowloon", or maybe: "Dragon Five", if they were more honest.

 

+ High Place, the 76 flat development from Henderson in Kowloon City, had its name mistranslated. It was "High Prace", or "High Price", and is clearly oevrpriced in the present market. At HKD 22,000 psf, I cannot see it selling well.

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INFLATION STRESS in Hong Kong

 

Hongkongers' median pay rose by only about 10 per cent between 2001 and 2011, despite property prices going through the roof and food prices climbing steadily.

 

According to the Census and Statistics Department, the 2001 median monthly income for men was HK$12,000.

 

But a decade later it was HK$13,000 - a rise of just 8.3 per cent, and that does not take inflation into account. Women's incomes went up 10 per cent, from HK$10,000 to HK$11,000.

. . .

The average per square metre price for a property measuring between 100 and 160 square metres in Kowloon went up 3.76 times over the 10 years to HK$154,327. A property of the same size on Hong Kong Island went up 2.95 times to an average of HK$167,939 per square metre.

 

The figure was HK$34,812 for a New Territories property in 2001, which increased to HK$73,228 in 2011.

===

http://www.scmp.com/...-pc-last-decade

 

 

Inflation is not the answer.

Growing the economy in a sensible way, so that Incomes rise over time, is better.

 

The reason smart government PUSH UP INTEREST RATES is to (amongst other things) keep home prices down, so that there will be maintained some sort of prudent balance between incomes and home prices. This HK government is not doing that - and there will be hell to pay one day.

 

Low end property prices are rising too fast in HK now, and that is building in troubles for many.

 

Buying property is usually a prudent way to protect yourself from rising rents. But now, Buying has become a dangerous way to expose yourself to rising interest rates, unpredictable government policies (and falling house prices.)

 

OTP- on AX

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  • 2 weeks later...

OTP's latest

 

http://asiasentinel.com/index.php?option=com_content&task=view&id=5127&Itemid=224

 

EXCERPTS:

"However, Leung's plans for dealing with the problem mostly address medium to longer term issues. One such is an idea for massive reclamation projects to add up to 3,000 hectares of land primarily for housing. But even if these eventuate - a big if given the time frame and likelihood of strong environmental opposition to some of them - the result would be at least a decade away."

 

"Leung's failing to address any of the above perhaps reflect the basic dilemma of any chief executive in Hong Kong, not least one who, having been a professional surveyor, understands the situation. That is that though high prices are an important issue for the public, the majority doe not actually want the much lower prices needed to enable those who have yet to get on the ownership ladder to do so.

 

About 60 percent of the population already live in their own homes and many of the 35 percent who live in public rental housing have no aspirations to own, if only because that seems too far out of reach. Indeed, much of the current clamor is for more public housing rather than cheaper private housing. Those already in the private sector ownership have no desire to see values fall, particularly if they bought recently. Negative equity was a major issue in Hong Kong after the 1998 crash and could be again.

 

Sky-high recent prices are partly the result of the deliberate squeeze on land supply conducted over the previous 10 years by the government. But even more significant has been abnormally low interest rates resulting from the peg to the US dollar and, to a lesser degree, capital inflow mostly from the mainland either for laundering purposes or speculation on an eventual upward revaluation of the Hong Kong dollar.

 

The worry must now be that if interest rates begin to rise to what were once normal levels - say 2 percent in inflation-adjusted terms - property prices in Hong Kong would fall back and, as happened in 1999, the government would reverse policy, slowing land sales and public housing projects to limit price declines. "

====

 

Right - he needs to think about the two shorter term "fixes" that I have suggested before:

 

+ A tax on vacant flats (and not just "new" vacant flats, like Long Beach, but empty flats held by foreigners. And there may be 200,000 or more of these in HK

 

+ Opening up industrial properties for residential use - perhaps under a 3-5 year "license" after an inspection. By making the use short term, he can curtail it, if and when prices drop and HK has a surplus supply of residential flats.

 

I expect at least one of these by mid-year, if prices take another great leap forward after CNY, as they are threatening to do.

==

 

/see-AX: http://hongkong.asiaxpat.com/forums/hong-kong-property/threads/146074/cy-leungs-impact-on-hk-property/

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From my Diary

 

WE BOUGHT A PROPERTY Today in Hong Kong

 

An older & cheaper flat nearby where we live now.

 

The cost per SF is about half of our present flat - and with the smaller size, the overall cost is one-third.

The rent will easily cover the mortgage payment, and we could even live in it, in a pinch.

 

I plan to sell our current property, and so holding this cheaper property will help to hedge against further prices rises.

So long as the sale of our existing flat can be achieved within the next few months, I will not mind if prices fall after that.

 

It is a sort of downsizing move, but we bought first because prices are pushing higher as we move into Chinese New Year.

 

The flat was priced at about 4-5% BELOW the bank valuation, so we think we made a shrewd purchase.

We saw the Centaline index push up by 2% in the latest week, so we decided not to wait on the "buy" side.

 

/Link: http://hk.centadata.com/cci/cci_e.htm

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  • 1 month later...

Duplicated Data...

 

 

DATABANK

 

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

====

03/1X: 122.09 121.41: 16,128 : 19,901 : 22,239 : 23,848 /11,413 : 12,423 : 13,916 : 16,283 : 22,113 : 6,420 : 11,519

02/25: 121.64 120.97: 14,242 : 19,941 : 24,287 : 23,896 /10,917 : 12,147 : 13,168 : 16,227 : 22,037 : 6,325 : 11,939

02/17: 121.58 120.27: 14,241 : 19,940 : 24,286 : 23,894 /10,894 : 11,901 : 13,212 : 16,667 : 22,112 : 6,586 : 12,022

02/10: 121.73 120.41: 14,280 : 19,994 : 24,352 : 23,960 /10,889 : 11,896 : 13,211 : 16,666 : 22,111 : 6,350 : 11,805

02/03: 120.66 119.40: 13,692 : 19,900 : 24,237 : 23,847 /10,547 : 12,114 : 15,331 : 16,609 : 22,036 : 6,215 : 12,309

01/27: 119.13 117.60: 15,144 : 19,818 : 24,138 : 23,749 /10,670 : 11,039 : 15,262 : 16,685 : 21,937 : 6,336 : 12,149

01/20: 118.38 116.61: 15,133 : 19,803 : 24,120 : 23,731 /10,664 : 10,993 : 15,260 : 16,683 : 21,241 : 6,281 : 11,815

01/13: 115.93 114.29: 14,982 : 19,605 : 23,879 : 23,494 /10,429 : 10,751 : 13,108 : 16,490 : 22,215 : 6,202 : 11,214

01/06: 115.60 113.93: 14,994 : 19,621 : 23,898 : 22,244 /10,478 : 11,211 : 12,741 : 16,502 : 22,231 : 6,071 : 11,041

Efficiency -NA- --NA- : 82.24% : 78.96%: 78.27%: 83.50%/74.89%: 74.31%:78.37%: 75.51%: 75.24%:74.58%: 87.32%

12/30: Prices / NetSF : 18,221 : 24,835 : 30,512 : 26,639 /13,929 : 15,020 : 16,257 : 21,606 : 29,492 : 8,116 : 13,359

12/30: 115.78 114.25: 14,985 : 19,609 : 23,883 : 22,244 /10,432 : 11,161 : 12,740 : 16,316 : 22,189 : 6,053 : 11,665

12/23: 115.18 113.61: 14,092 : 19,603 : 23,876 : 22,237 /10,514 : 11,719 : 12,753 : 16,332 : 22,210 : 5,957 : 11,429

12/16: 114.97 113.50: 14,072 : 19,574 : 23,840 : 22,024 /10,527 : 11,733 : 12,744 : 16,319 : 22,193 : 5,988 : 11,288

12/09: 114.57 113.20: 14,037 : 19,527 : 22,150 : 22,150 /10,229 : 11,699 : 12,715 : 16,283 : 22,144 : 5,995 : 10,892

12/02: 114.38 112.52: 14,035 : 19,523 : 23,778 : 22,146 /10,423 : 11,896 : 13,656 : 17,883 : 22,324 : 5,978 : 10,810

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

10/14: 111.19 109.41: 15,804 : 19,268 : 22,649 : 21,679/ 10,048 : 10,897 : 12,901 : 15,555 : 20,753 : 5,814 : 11,091

10/07: 111.11 109.21: 14,469 : 19,337 : 22,730 : 21,756 // 9,780 : 11,298 : 12,407 : 16,922 : 20,729 : 5,904 : 10,798

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/

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What $200,000 Buys in World's Most Expensive Real Estate Market

 

Looking to spend $200,000 for a villa in Monaco?

Good luck. For that amount, you'd be lucky to get a one-bath -- as in a single four-foot by eight-foot bathroom.

Monaco is the most expensive city in the world when it comes to real estate, according to Knight Frank's latest Wealth Report. Knight Frank, the London-based real-estate firm, said that the average price of real-estate in Monaco was between $5,350 and $5,920 per square foot in the fourth quarter of 2012.

 

abbav.jpg

 

/see: http://finance.yahoo...ew_default=true

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  • 3 weeks later...

To March 17th:

 

68384153.png

 

R:

"The HK property market is performing exactly as I predicted at the beginning of this year. What essentially is happening is that the "haves" are increasingly being protected as landlords, and the "have not's" are increasingly being isolated as renters. Going forward, this will make it easier for landlords to exploit renters, as the rent/own arbitrage costs makes it increasingly prohibitive for renters to become owners."

 

Maybe this is one of those markets where transactions are so few, you can see what you want to see. I see something different.

 

+ Transactions in the secondary market have fallen to almost nothing, except in the below $5 million bracket, where prices are still rising

 

+ Developers are cutting prices on new properties, so they are more competitive with prices in the illiquid 2nd hand market.

 

This is what I predicted: the developers would take the brunt of price cuts. And why not? The premium to secondhand had reached ridiculous levels, and developers can still do very well after the modest 5-10% price cuts that we have seen.

 

After a while, I think we may see buyers creeping back into the secondary market, as they see low-priced properties continue to rise, and they see that sellers (except a few panicky ones) are not going to give in, and cut pices in response to the pressures of the "cooling" measures.

 

I don't think renters are under any special pressures. They happily take advantage of the cuts in the primary market, if they like particular properties than come on the market in that sector.

 

(from AX)

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From DrB's Diary:

 

MISERY OF THE WEALTH GAP (in Hong Kong)

 

(that's what the SCMP has entitle a brief editorial in today's SCMP)

 

"The poorer you are, the unhappier you become...

Households with a monthly income of HK$10-20,000 have the highest misery index (2.93.)"

 

"The happiest (at 2.79), have a monthly income of HK$50,000 or more."

 

"A widely reported global study in November... found the average HK-er thinks he/she needs to earn HK$1.5 Million, or HK$125,000 a month to be happy."

== ==

 

Another way to look at it is, what sort of property (and where) do they need to live to feel happy.

 

If you assume that half $50K income pays for housing (with some of partner's income supporting living expenses), and 1/3 of the HK$125K goes to housing, then maybe most people think they need to be able to pay a rent $25,000 - 40,000 per month, to have satisfactory housing.

 

Obviously, as rents rise, the requisite income would go up too... unless people own their own properties - but that may take a higher income to cover the mortgage payments, on the rising property prices.

 

Here's a Historical chart of Rents in HK

 

Hong%20Kong-residential-prices-vs-rent-graph-1.gif

===

/source: http://www.globalpro...g/Price-History

 

A recent price point for 70-100 sm flats:

 

(Nov.'12) : 85 sm x $HK371 = 915 sf x HK$34.5 = HK$31,566

... and that's towards the middle of the range, I calculated above.

 

Designing a Small and Cheaper property to provide a decent home, may therefore be one great way to cope with Rising Rents, while preserving Happiness - especially when someone is reluctant to spend money to buy a high-priced flat.

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Mid-Levels and other "expensive" areas struggled in Q1-2013:

 

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

====

03/24: 123.45 122.72: 16,175 : 19,960 : 24,311 : 23,919 /11,428 : 12,439 : 13,964 : 16,339 : 22,190 : 6,184 : 12,159

====

12/30: 115.78 114.25: 14,985 : 19,609 : 23,883 : 22,244 /10,432 : 11,161 : 12,740 : 16,316 : 22,189 : 6,053 : 11,665

====

Change +6.6% +7.4%: +7.9% : +1.8% : +1.8% : + 7.5% // +9.5 % : +11.5%: +9.6% : +0.1% : + 0.0 % : +2.2% : +4.2%

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MORE on Transport/Walkability in Hong Kong - from OffThePeak:

 

(1)

There is a global market (for most industries) and so salaries of certain people (such as top bankers, or top lawyers) will tend to equalize. When salaries are not able to equalise, then industries will be closed. As an example: Factory jobs have moved away from the US and from HK too, because the work can be done more cheaply in China.

 

I think people comparing HK property prices with, say, US prices should be adjusting for :

 

+ Lower transportation costs,

+ Lower income tax rates,

+ Lower property taxes, and

+ Lower interest rates

+ Lower transaction costs in HK

 

(The government just grabs too much of the wealth in the US, and that hits property prices there, and it could get worse before it gets better.)

 

Once you do that, the gap is not so big as it appears on the surface.

 

If the US wants to get its property market moving again, a great way to do that is to change the American living arrangement away from suburban living, so that more of the average American's spendable income can be shifted away from wasteful car-usage, towards wealth-building housing expenditure.

 

America has much to learn from Hong Kong, but if you try to transfer knowledge, you run straight into American stubbornness, and American arrogance. It is a pity that it works that way, since the old-fashioned car dependent living arrangement is just draining away American wealth.

 

I agree that HK is mostly pedestrian friendly - especially as compared with the USA. But it can get better. Have you seen the changes that have happened in London over the last decade or so? I think the writer, inspired by Paul Zimmerman's group, wants to see HK learn from the examples of London, and other Western cities.

 

Even Brooklyn is getting rid of traffic lights, and wants to slow the Cars down:

 

4th_Ave_road_diet.jpg

 

/source: http://www.streetsbl...raffic-calming/

 

Taking back the streets from the speeding cars is a very good way to make a city more walkable.

 

One thing that does bother me about HK and all those shopping malls, is that if you simply want to sit down, you normally have to become a customer of someone. You will not find the free seating (such as many park benches) that you will find in other great cities.

 

(2)

 

The reasons "America wants to get its property market going again" are:

 

+ To get the banks out of the hole on many under-secured loans

+ To get mortgage borrowers out of "upside down" loans

+ To inspire more home building, and therefore job creation

+ To create a feel-good-factor which may benefit politicians (incumbents)

 

I agree with you about the transfer from future owners (mostly young) to present owners (mostly old), and that most of the drop was correcting "irrational exuberance" in home values - here's a link to Prof. Robert Shiller's chart showing a surge/ then a drop in Real Home Prices:

ShillerQ42011.jpg

A 5.5-6.0% gross yield on NYC property is not that great, because something like 1/3 of the rental income disappears in real estate taxes.

 

USA Florida prices would have gone even higher, if they had been near a tax-free earning machine like Hong Kong.

 

It is the COMBINATION of :

+ Lower income taxes

+ Lower property taxes

+ Lower transport costs

+ Money flooding in from China, seeking the low-taxed "security" in HK

+ The (possible) beginnings of a feeding frenzy

 

... which has put HK prices to where they are.

 

London is another highly walkable city, which has safe haven characteristics, and its property prices are high also.

 

If you under-estimate the attractions of a walkable city, with cheap and efficient transport, you are going to get home prices wrong, and you should be looking for real estate investments which will benefit from improving infrastructure, which benefits walkability, and provides better transport.

 

Thus, properties like Riva (near Kam Sheung Road) might be interesting, because of the coming Northern Extension of the West Rail - but you could argue that SHKP has already put that factor in the price of Riva - certainly they advertise it.

 

/see: http://hongkong.asia...new-properties/

 

I would prefer to "play" the infrastructure improvement, by purchasing an older property at near $6.500 psf, because it is benefiting from a very short walk to Olympic station, ongoing gentrification of the TKT area, and should also benefit from XRL, the Express Train to China, which I believe will have a Northern exit within walking distance.

 

People here have been talking about the impact of the MTR extension on Sheung Wan for a long time, and i think that impact is (mostly) already in the price. But the impact of XRL is hardly written about (in English) and the convenience of people coming from China may prove a bigger deal than the convenience of HK people, especially if the cooling measuring holding back China-buying are eased.

 

===

/see: http://hongkong.asia...nsport-are-key/

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I think these sorts of simplistic calculations are wrong, since they miss out on HK's low tax rates, and lower transport costs:

 

""I was actively involved in the real estate sector here in Hong Kong but recently I’ve liquidated all my positions and have zero exposure to property now in Hong Kong. If you look at the history of asset bubbles, it is clear to me that Hong Kong and China are both in a gigantic property bubble, which is going to end very badly; and, in my view at least, this bubble is even bigger than the bubble we saw in the U.S. If you look at some of the classic metrics, which determine whether property is expensive or cheap or grossly overvalued,

 

....if you look at the home affordability ratio, which is the price of a property divided by the annual income, the home affordability in this city—Hong Kong—is off the charts and in China it is even higher. It takes 13.5 years of income to purchase an apartment here in Hong Kong. In some of the big cities in China, the ratio is more like 25 or 30 years of income. If you look at some of the other countries like the U.S. or Australia, it takes maybe 7, 8, or 9 years maximum."

 

===

P. Saxena: http://www.financial...ubble-end-badly

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HK Luxury Rents under pressure - as Banks Downsize Costs / SCMP article

 

Hong Kong - ranked No 9 worldwide - posted a 3.7 per cent year-on-year increase in luxury rents last year. Beijing saw the highest average increase in Asia - 8.5 per cent - followed by Shanghai (6.1 per cent) and Guangzhou (4.7 per cent).

. . .

Patrick Chow, head of research at Ricacorp Properties, said: "Constrained housing allowances for expatriate staff and a downsizing of the operations of Hong Kong's financial institutions have weakened demand for luxury flats in particular."

 

With smaller budgets, he said, expatriates were forced to look for smaller apartments, thereby boosting rents for mass and mid-range housing.

 

Chow said rents jumped 16.8 per cent in the low-end to mid-range market last year.

. . .

The demand for HK$100,000-per-month homes has dropped, causing a further softening in rents over the past four quarters

 

"The demand for HK$100,000-per-month homes has dropped, causing a further softening in rents over the past four quarters."

 

===

+continues: http://www.scmp.com/...rises-hong-kong

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  • 2 weeks later...

(From AX, here's OffThePeak, on the Main Property thread):

 

 

Bank Valuations: "30% below market" ?

 

No way, in my area!

Yes, some bank valuations in this area (TKT) have come down further in the last several days:

 

On the HSBC website:

+ 1% lower on the 38 year old building (Cosmo Estates),

+ Unchanged at The Long Beach

 

I would say that they are within 3% of Market Values - so no big deal.

 

Why do people on HK Island this their "market values" are so far above Bank Values? Perhaps they are talking about asking prices, which I would think are looking very high to buyers. Are there any transactions that support the lofty asking prices?

 

Eventually, market values will be set by transactions, no matter what Sellers are hoping for. On the way up, the Buyers were fighting the market trend. Now its seems to be the Sellers that are fighting it. And the banks are doing their best to navigate the space between.

 

Frankly, I can see little incentive to pay up for flats over $10 Million, since the developers are going to have to get FAR MORE REALISTIC on their pricing as this market coma period continues. And I think they will be cutting must aggressively on their expensive flats. At minimum, I think they will have to absorb Stamp Tax - or discounts equivalent to that.

 

I wonder how long the aggressive discounts at One West Kowloon will last? They are saying that it is "just to move supply before the new Net SF regulations apply." But that might just be an early crack in the premium prices that Developers have been extracting for New Builds.

 

A time may come when "flats with deferred completions" trade at a discount rather than a premium to secondhand - since you cannot live in them until you get the keys, and meantime you are forking over a rental payment that exceeds the interest rate.

 

===

/see: http://hongkong.asiaxpat.com/forums/hong-kong-property/threads/149386/the-state-of-the-hong-kong-property-market-(8)/

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The Pounding in TKO / What happened in the Tsueng Kwan O area?

 

Why did these specific estates get so hard-hit?

 

Changes over the past Month - in Centaline's Data

----------

04/14 : 120.12 119.35:

03/17 : 123.66 122.98:

change: -2.87% : -2.96%

Areas:

=====

HK Isl : - 1.84%

Kowln : - 5.26%

NT- E : - 1.79%

NT- W : - 1.70%

compare:

Ocean Shores : -13.54% : $ 7,779 : TKO

Laguna City-- : -12.30% : $ 6,654 : Cha Kwo Ling, nr. TKO

ParkCent/CHt : -11.13% : $ 7,712 : TKO

Whampoa Gd : - 9.39% : $11,446 : Hung Hom

Resid . Bel-Air : - 9.11% : $15,177 : HK Isl.

Caribbean Cs. : -10.04% : $ 5,795 : NT-W, Tung Chung ... parkch.png ..

Park Central was a very big gainer

===

Late 2008 / 2013-H : $3,500 - $8,700 : +149%

Early 2012/ 2013-H : $5,900 - $8,700 : + 47%

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Here's one bit of recent news : A counterpoint to the Wings hype, perhaps?.

 

Wheelock pays HK$2.5b for Tseung Kwan O site.

 

Wheelock Properties yesterday outbid eight developers to win a residential site in Tseung Kwan O for HK$2.45 billion for what is to be its third development in the district.

The developer also sold its new office tower in Kowloon Bay to Manulife (International) for HK$4.5 billion, or HK$8,789 per square foot, in the largest single office-tower transaction in Kowloon this year.

Wheelock acquired the Tseung Kwan O site for HK$4,301 per square foot, in line with market expectations..

 

Alvin Lam, a director at Midland Surveyors, said: "The price, in line with market expectations, reflects developers still have confidence in the market outlook.".

 

Wheelock chairman Stewart Leung Chi-kin said the company would spend HK$5.5 billion to HK$5.8 billion to develop the project.

"The project will be released for sale as early as within 2-1/2 years. The prices will be fixed at more than HK$10,000 per square foot," Leung said.

"We are interested in the site as it is one of the last few available in Tseung Kwan O."

===

/more: http://www.scmp.com/...ung-kwan-o-site

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Putting TS and PA together, I get...

.

Two different areas of the Hong Kong SAR, have long had very similar prices.

.

That's the old stand-by, Taikoo Shing on Hong Kong Island ... update

tkhk.png

.

And a newer property in the Olympic Area, called Park Avenue /Central Park ... update

.pacpkw.png

.

And these two areas can be put together, to create a "virtual history" for prices in PA/CP from before it was even launched. Here it is:

.

prophk.png

.

This suggests that CP is at the top of a channel, and could pullback to the center of that channel, near $10,500 (and rising), or even a major support level just below $9,000, in a more severe correction. Or, in a more bullish scenario, prices could keep banging on the top of the channel or even breakout above it.

.

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