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Big Three Property Investors - Hong Kong/ Meet-up group

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Big Three Property Investors - Hong Kong/ Meet-up group

 

(A NEW social networking group... To discuss more than Location^3)

 

> LINK / Meet-up Group is still under formation

 

HKpropertyGp_zpsg6w08sdk.jpg

 

The three most important things in property investing are...
Before you jump in, and say: "location, location, location!", please consider how vague and unhelpful this prescription is! So I have come up with a different list, and investors in this new Meet-up Group will be using these concepts as a tool for successful property investing.

The Big Three concepts are: Cash Flow, Timing, and Transportation. These give a more accurate and useful guide to success in property investing. We will learn how to employ these concepts in investing, and discuss specific locations where they can be used.

Venues where we will plan to meet include...

(still under consideration: probably alternating between Kowloon Tong, Mongkok, or TST

...and a location on HK Island, possibly near Central or Admiralty)

 

We will discuss specific locations in and outside Hong Kong, and apply the three tools discuss new and old projects

 

Here are some locations we might look at, as examples for our future discussions

 

> Hong Kong: Can you still make money AFTER the cycle peak is in place?

 

> West Philly and Brewerytown in Philadelphia: http://www.greenenergyinvestors.com/index.php?showtopic=20036&page=1

> Circuit, in Makati, Philippines: http://www.greenenergyinvestors.com/index.php?showtopic=20447

 

========

 

AX : Prop-section : Big 3 Property Principles thread :

GREO channel :: https://www.youtube.com/channel/UCFbX54tgrqJrlyU9UxoeN_w

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Timing is important.

And the 18 year cycle will be one of the key tools that we may use

 

> The 18 year cycle Property Cycle : http://www.greenenergyinvestors.com/index.php?showtopic=19927

 

This cycle was expected to peak in 2015-2017 in Hong kong, even before 2011.

 

HKP-pic_zps569e62d8.jpg

 

"I think HK is on its way into a Long Cycle top... in the 2015-17 time frame" - post #4-Feb.2011

CCLI-2015_zps154e6ad8.png> source

And as we got closer to that window, I was able to narrow it down to Sept.2015, and posted:

(At that stage, the market was up about 11% for the year, 2015):

 

"The HK property market could be peaking right here and now:
As I have said before:
NEXT PEAK: 2015-2017: Or 2016 +/- One Year
To be followed by a 3-5 year correction
. . .
Centaline Leading Index--- :
WeekEnd: -CCLI- : -CMMI- : ParkAv: C'ribC : TaikSh. :
08/30/15 : 146.78 : 148.27 : 13,273 : 7,577 : 14,923 :
2014-yrE: 132.45 : 133.50 : 12,582 : 6,141 : 13,301 :

Change : +10.8% : +11.1%: +5.49%:+23.4%:+12.2% "

===

> see: http://hongkong.asiaxpat.com/forums/hong-kong-property/threads/26777a7e-c2b6-4305-86c0-cc776e3fc5ea/is+it+possible+to+call+the+peak+3f/

 

I put my money where my mouth was, and sold my own property, completing the transaction in September 2015

 

As this is being written in mid-Dec. 2015, the Centaline index has already fallen about 6% from the mid-September 2015 peak

 

Developer Share prices usually lead the physical market by 6-12 months.

I posted the following chart on AsiaXap back in April 2015 :

HPI was then 28,260

HK-Prop-15yrs_zpsgsvqp2vr.gif

 

> update: http://www.aastocks.com/en/stocks/market/index/hk-index-con.aspx?index=HSP

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Cash Flow is important too.

 

Yields in Hong Kong are down to maybe 3-3.5%, Gross,

 

and perhaps only 2-2.5%, net.

 

This is only acceptable because of ultra-low interest rates in Hong Kong, with mortgage rates near 2%.

 

Rates are expected to be pushed up over the next several months, and so this is another factor weighing on HK prices

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The third thing that I look at is Transport issues.

(this is why location matters, short walks are best):

 

In its simplest form, this means:

 

Ideally, You want to be within a short and easy distance of where you Live, Work, and Play.

A nice property within a short walking distance of a place with many jobs, and/or near many other attractions, will usually be worth significantly more than a slightly nicer place which requires a long commute to get to work, or play.

 

So when I look at a property, I automatically think: Where are the jobs, that will provide employment for the people who work there.

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The High Costs of cars, crowded streets and "free" parking

 

manila-traffic-jam-cashmerecravingsblogs

Traffic jam in Manila - Cost $57 million a day

 

The transport issue is certainly more than counting the number of minutes it takes to drive to work, or to walk to work.

The time lost is certainly part of it, but there are many inefficiencies built into a car-oriented economy such as you see

in the USA ... and also in the traffic jams of metro Manila. An over-reliance on cars can ruin an economy, and you can argue that

transport efficiency has been a competitive advantage of HK. Meanwhile, transport inefficiency has been a big problem in the USA

 

Look at parking, just one part of the bigger picture, and you will begin to see the problem

 

shoup1.jpg : Shoup-on-Velib-bike-in-Paris-225x300.jpg

 

The High cost of "Free" parking - Professor Shoup / source : his website

 

MP3 : http://shoutengine.com/StrongTownsPodcast/StrongTownsPodcast-0265-donald-shoup-14061.mp3

 

Maybe 3% of US GDP is the cost of "free" parking in the USA.

This is a subsidy that raises costs for everyone, and encourages people to over-use their cars

 

A developer talks about parking requirements - John Anderson / source

 

MP3 : http://shoutengine.com/StrongTownsPodcast/StrongTownsPodcast-0266-john-anderson-14020.mp3

 

Attached parking (if excessive) does not raise the value of a property, if reduces it.

An excessive parking requirement forces the developer to build less productive, income-producing space, and so it reduces cash flow, and capital values

=== ===

 

PAPER:

Truth in Transportation Planning

Planners use bad numbers, and get bad results:

"Transportation engineers and urban planners often report uncertain estimates as precise numbers, and unwarranted trust in the accuracy of these precise numbers can lead to bad transportation and land-use policies. This paper presents data on parking and trip generation rates to illustrate the misuse of precise numbers to report statistically insignificant estimates. Beyond the problem of statistical insignificance, parking and trip generation rates typically report the parking demand and vehicle trips observed at suburban sites with ample free parking and no public transit. When decision makers use these parking and trip generation rates for city planning, they create a city where everyone drives to their destinations and parks free when they get there."

. . .

"The precision is misleading.The fitted equation at the bottom of figure 2 suggests that a fast food restaurant generates a peak parking demand of 20 spaces plus 1.95 spaces per 1,000 square feet of floor area, but the 95% confidence interval around the floor area coefficient ranges from –3 to +7 spaces per 1,000 square feet."

> https://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/journal_of_transportation_and_statistics/volume_06_number_01/pdf/entire.pdf

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Cash Flow issue: The Problem of Student Housing

 

> A Failed UK student housing project

 

THE RISKS of Student Housing projects

 

(the following was posted as a comment on AX):

 

b--- (4 mths ago)

If you want to buy a property, you should always get a mortgage. It's about using the bank's money to make money. However new legislation coming in soon:-

http://www.thisismoney.co.uk/money/buytolet/article-3153541/Profits-slashed-wealthy-buy-let-landlords-Budget-crackdown-mortgage-tax-relief.html

HIGH YIELDS do not tell you the full story! Caveat Emptor!!!

If the property does not go up in value, what's the point in buying?

Beware of ‘rental guarantees’ offered by developers. This can often be an overstatement. The guaranteed rents are attractive to investors, but often they fail to materialise. Investors are actually subsidising the guaranteed rent by paying an inflated price for the unit they secure. There have been a number of student pod schemes that have stopped paying out the guaranteed rents soon after completion and investors have then discovered that the real market rate for the rents is much lower, reducing their yield. They have been left with an underperforming asset, that is difficult if not impossible to sell at an acceptable asking price to the investor.

Hence a 10% return guaranteed for 10% years looks good, but it's worth the paper it's written on.

I would stay away from Student Accommodation for the following reasons:-

Student accommodation attracts lower capital growth than other types of property

Maintenance/Estate agents bills will typically be higher than average

You may have a void period during summer with no tenants

Students generally cannot provide references

At the extreme, if your student tenants are noisy/disruptive you could face penalties form your local council

Difficulty in re-selling

Typically the properties can only be let to students and can not be bought by an owner occupier

The biggest concern is, if a bank is not prepared to provide a mortgage, then that is something you should be wary of.

I'm not saying don't buy student accommodation, but you should be aware of the risks.

Have a look at the following articles:-
http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/10852153/Student-digs-offer-a-harsh-lesson-for-investors.html
http://www.thisismoney.co.uk/money/mortgageshome/article-2448532/Are-posh-university-flats-promising-investors-7-income-worth-look.html
==

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WORTH DISCUSSION ?

 

Trends and ideas Airbnb

Growing tourist numbers and a shortage of hotel beds are driving Airbnb’s business in Japan. Some 525,000 foreign travelers stayed in accommodations booked through the company for the year ended in June 2015. As of November 1, Airbnb claimed to list 21,000 private properties in Japan.

Separately, Fast Company reports that small hotels are using Airbnb as a reservation service because it is less expensive than Expedia and similar booking services.

 

Self-driving cars

Self-driving vehicles will be widely available within the next 20 years and are expected to have a dramatic effect on everything from pubic transit policies to parking requirements. Urban planners are now looking at the changes that self-driving cars will have on the urban environment, changes that could also affect property prices.

 

Mental health and urban planning

New research from Italy suggests that accessibility to public transport and a dense urban structure, could reduced the risk of depression, especially for women and elderly.
These news tidbits Chris Dillon, in his Dec. 2015 LANDED Newsletter:

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Possible Agenda topics for Sunday's Big Three meeting

I will try and be there by 6:30-6:45, and start the meeting at 7pm.
We will aim to finish by 9pm, but that is not rigid

+ Manila Philippines trip report
+ Sweden / UK trip report
+ Philadelphia update / elevator chat; a winter dip?
+ Big three principles : Cash Flow, Timing/Cycles, Transport/location
+ Zero-Commission brokerage

OPEN Discussions: what opportunities, or risks do people see.
+ Near close: Future Big-3 Meetings: will we open them up? Venues?

===
If you want to talk on one of the above topics, then please make a few notes, and be prepared to talk for up to 5 minutes,

and we will allow 10 minutes or so for questions afterwards

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The psychology needed by a successful property seller

"I've been trying to sell one more but to no avail I've dropped the price 6% from my august asking but nothing so far just a few viewings "

I don't get that psychology at all...
You tried to sell in August and got no buyers. A few viewings, but no offers, apparently.
The market is now down 6.5% from the peak, and you have dropped your price by (just) 6%. So by my calculation, you were too high in August, and are still too high now. What's the point?

You are doing what many people do: You are chasing the market lower.

If you really want to sell, you need to cut your price more, and get ahead of the market. If people see your place as a bargain, then they may buy. Else, they will just wait.

Don't you wish now that you had cut your price by 5% in September, and sold it then?

Property market psychology

(I hope this is useful, and does not sound too "preach-y" )

 

Here's how I look at the psychology of buyers and sellers in the property market. At any particular time, sellers are stacked up above the market price, willing to sell for various reasons. And a few buyers have a potential interest in buying. It is the job of the agent, to transform the vague buying interest that potential clients may have into a genuine solid bid that the agent can show to one of the sellers. It works best, if the agent can get the buyer interested in a particular flat - interested enough to make a concrete offer. In normal times, there is probably a 2-5% gap between one of several sellers, and the best buyer. In a rising market, called a Seller's market, agents have an easy time getting buyers to pay the offer price, and many deals get done. The trick then for the agent is getting the seller to stick to the price they mentioned.

In a sideways market, and agent can only get a deal done, if he can get a buyer to come up a bit in his bid, and the seller to come down a bit in their offer. And he/she needs to get enough movement in price that they can get paid a commission. (BTW, I have had transactions fail because we were "trading inside the fees", where the buyer and seller could meet, but there wasn't enough overlap to cover the commission. Sometimes in these cases, an agent will cut his commissions to get the deal done. But most will resist that.)

We are now in a Buyers market. Where the buyer is king. A smart agent will waste little time in this sort of market looking for sellers who want a price at-market or above market. The only seller that is of use now, is a seller who will sell below market. The key thing to make a sale is to find a buyer who will pay near the market price. The agent can then go and show that interest to one of several sellers, and see who will come down in price. If the buying interest is 3 to 5% lower than market, I think there is a pretty good chance a seller will move. If not now, then maybe in a week, or two, or three. In a falling market, the prices just keep getting cheaper. There are many sellers chasing the market down.

(this description is based on what I have written in my about the psychology of the XXX market, and is also based on years of experience. I am told that parts of my book are still used in university courses, so I suppose there must have been some value to some folks.)

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TRANSPORT : The best paying jobs are in Central, HK.

 

So prices (per sf) drop as you get further from Central...

 

TRANSPORT

In its simplest form, this means:

 

Ideally, You want to be within a short and easy distance of where you Live, Work, and Play.

A nice property within a short walking distance of a place with many jobs, and/or near many other attractions, will usually be worth significantly more than a slightly nicer place which requires a long commute to get to work, or play.

So when I look at a property, I automatically think:

Where are the jobs?...

 

DATA

In HK there;s a very good MTR system. Consequently, it is not essential to live right next to where you work. You have reliable and predictable commuting journey using the MTR. The thing is. the longer the journey, the lower the price. And you can readily see that along the Tung Chung line. Just have a look at how these prices drop, as you get further from Central:

MTR Station : Time : Estate--------- : Price/Sf : Prem>CC : Saved- : / min.
Kowloon ---- : 10 m. : Sorrento ----- : 16,446 : + $ 9,922 : 35 mins. : $283
Olympic ----- : 15 m. : Park Avenue : 13,071 : + $ 6,547 : 30 mins. : $218
Tsing Yi------ : 26 m. : Tierra Verde- : 10,027 : + $ 3,503 : 19 mins. : $184
Tung Chung : 45 m*: Caribb. Coast : $6,524 : + $ 0,000 : oo mins. : $000
==========
Tung Chung's Caribbean Coast includes an extra 12 minutes for the bus ride.

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Where am I investing ?

Well I cleared a bit more than a 7-figure sum in US dollars from the sale of my main residence back in Sept. That doesn't go very far in HK, but it will buy a lot of property in other countries.

My basic concept now is to diversify. This is a large sum of money, and I want to use it to provide a decent place to live somewhere (which is outside HK). Fortunately, with this large sum in hand, I can get that with only a portion of the money, if I invest somewhere cheaper. However, I do not want to be in a rush to reinvest. So far, I have invested roughly half of it in longer term investments. The rest remains parked in short term time deposits, while I await better opportunities.

A decent chunk of it - about 26% - is going into the Philippines.

There for about 15% of what I cleared from the sale of my property here, I bought something comparable in size and and amenities to what I had sold in HK - but it will not be completed for about two years, so I have to live somewhere else in the meantime. Fortunately, the place I bought is in Makati, in the main CBD of Manila. I may live there when it is handed over. But if I decide not to live there myself, it should be easy to rent it, and I would expect to get a net yield which is approximately double (or more) of what I would get investing in HK. And I think the prospects for capital gains Makati are substantially better than in HK. Property there is not massively overvalued as it is in HK. Beyond that major property, I bought two smaller ones, costing about 11% of my HK property. These should provide rental income, to cover my living expenses, if I decide to live in the Philippines. As you may know from another thread here, I have already taken the key on the smallest property. I will be using this like a hotel room, as I travel back and forth, getting to know the Philippines better. So by the time the main property is delivered, I should have a good idea if I really want to live there. If not, I expect to have a decent investment, generating good cash flow, with reasonable prospect of future capital gains. In HK, I get neither the CF, nor the capital gains.

Another chunk has already gone into property in the USA - that's a house in Philadelphia.

The property is already rented, and the guaranteed return is 11% pre-tax.(!) This sounds too good to be true, but I kicked the tire on the investment for months before I put my money in. I am convinced it is for real. I have a guaranteed rent for three years, and the first two rental payments should be in my bank account before the end of this month. I like the prospects for capital gains, and since I bought it, I note that Zillow now has the property valued at 15% more than I paid. I am already looking for the second investment in the same city, for the same source. These investments in Philadelphia should provide me with a nice high and stable yield. Cash flow is important to me, since I am now self-employed, and there are a limited number of things I can do in HK. Successful investing is the very best source of income for me. And the Philadelphia property is fully managed, with no headaches for me. My 11% return is AFTER those management costs.

A third chunk, about 15% has gone into HK-listed shares.

These are shares which I have analyzed thoroughly. I like that fact that I am buying a very solid company at about 50% of its NAV. And the yield I expect to receive is significantly more than I can get from investing in HK property. This is my main HK dollar source of cash flow, which will be very helpful to me if I choose to stay in Hong kong.

The rest of the money is mostly in HKD time deposits,

...while I await better opportunities, such as what I am looking for now in Philadelphia. There's a little invested in Gold, and I may add to that once i have a clearer picture about where the Gold price is going, and a post Fed-rate-rise environment.

I can go into some more detail on my investments, if people have questions. And maybe I will add some more comments if/when I make further investments.

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ccli_chart_zpssvymayi9.png : update : forecast

HISTORY: Prices up Fivefold
Low was June 2003 : with average price of HK$ 1,941 per sf, gross
High was November 2015 : at HK$10,487 (per Midland Realty)
Prices hit a peak in mid-September, before retreating 6%, says Centaline,
and are still up 4% for the year

Supply/Demand balance points to price falls
+ Transaction volume in November was just 1,891 - the worst monthly figure in 20 years
+ Interest in selling is rising - with potential sellers up 15% to 1,197 among 11 major estates
+ Viewings were down 20% week-on-week - Buyers are willing to wait for lower prices

=== ===

 

Bearishness in the SCMP seems to be increasing

(12/21) : Owners cut prices amid sluggish home sales
+ Cuts of up to $1 million, to speed up sales
+ 282sf home at Golden Lion Gdn in Tai wai, sold at $2.73mn, lowest price of the year
+ North point: Braemar Hill Mansions 1,105sf: price cut from $20.05mn to $19mn
+ North point, Healthy Gdns: price reduced from $6.6mn to $6million
+ Though owners cut prices by 5-10%, few buyers were biting. They want a bargain
+ Interest in selling is rising - with potential sellers up 15% to 1,197 among 11 major estates;
Meanwhile, viewings dropped by 20% week-on-week

(12/22) : Home prices trending down after 12 years of increases
+ Expected Fed rate rises and China's slowdown are denting confidence
+ Experts are forecasting price falls of 5% to 30% in 2016
+ Prices for new launches are down as much as 20%, with more cuts expected (on fresh supply)
+ Owners are reluctant to cut, but sliding rents may force more realism
+ Hemera keys are now available, and as owners offer these flats into the market this has driven rents are down to $19.50 psf, a new low. Hemera is in LOHAS Park. In Nov 2015 the average monthly rents in LOHAS was $22 per sf (Centaline), so these new flats on top of the MTR station are offered at more than 10% below the market price
+ Louis Chan Wing-kit of Centaline expects prices to fall 15% by end Q1-2016
+ JLL was the least bearish, expecting a drop of just 5% in 2016

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NOTES: on Meeting held Sunday night, 20 Dec. 2015
We had six people come.
There were 2-3 last minute regrets, and another 4-5 have expressed an interest in future meetings.
We agreed to keep this a Private group for the time being, since if we opened it up thru Meet-up, we might be flooded by too many people. The present venue would be okay for 8-12, but probably not more than that. So we may keep the group private until we have found a better venue, which could accommodate 20 or more. The Meet-up group, when used, may initially be limited to 50 members, and probably no more than 20-30% would come for any one meeting. But there's always a chance that a particular topic would attract wide spread interest.

AGENDA

+ Manila Philippines trip report - Nov/Dec. 2015

+ Philadelphia update / elevator chat; a winter seasonal price dip underway?

+ Philadelphia areas: Brewerytown, Mantua, West Philly-Cedarhurst, Spruce St. - special appeal to recent college grads?

+ Big 3 principles : Cash Flow, Timing/Cycles, Transport/location - how do these apply?

+ Future trips: Philippines (Feb?), Philadelphia (Apr?), Visitors from Manila after Chinese New year?

 

 

MANILA TRIP - Surprises

BAD:

+ Takes far longer to get things done than HK. Many things get half done

+ Potential rents are less than expected: 12k/mo. on P-2.1mn cost, gives :

+ Banking and utility payments are way behind HK. Rent is not sent by standing instruction

+ Not as easy to find a comfortable place to use the web, as it is in HK

+ The modest rise in rents in 2015 was more due to delayed supply, than rising demand

+ People do not have clear idea of property values, and exit may be slow & expensive

GOOD:

+ Filipinos are genuinely helpful, and kind-hearted - and they mostly speak English !

+ The Avida admin office was helpful, if needing some reminding

+ It can be a relaxing place to be, even with the crazy traffic - web, roof at San Lo

+ There are many inviting places to eat and visit in Mak/greenbelt, and BGC

+ There are some very cheap prices - Films at P-160 /200 = HKD 27-33

+ BGC and Circuit look like comfortable and "fun" places to live

 

 

 

BIG 3 : principles : Cash Flow, Timing/Cycles, Transport/location

 

My Big Three concepts are: Cash Flow, Timing, and Transportation. These give a more accurate and useful guide to success in property investing. ...
===
1/ Cash Flow:
Yields in Hong Kong are down to maybe 3-3.5%,Gross, and perhaps only 2-2.5%, net. This is only acceptable because of ultra-low interest rates in Hong Kong, with mortgage rates near 2%. Rates are expected to be pushed up over the next several months, and this will be a factor weighing on HK prices. A shift to Bearish sentiment will also hit prices, and investors will need a higher yield to compensate for the lack of capital gains.

2/ Timing / Cycles
Timing is important.
The 18 year "long" cycle is one of the key tools that I use. Back in 2011, and even years before that, I said that this cycle could be expected to peak in 2015-2017 in Hong kong. Earlier this year, I narrowed it down to September. And now since the mid-September peak, we have seen a drop of about 6%. With more coming imho. Right now, I am expecting a 30-40% drop, over the next 3-5 years. I will fine tune this projection as we go along.

3/ Transportation issues (this is why location matters so much, short walks and short commutes are best!):
In its simplest form, this means that ideally, You want to be within a short and easy distance of where you Live, Work, and Play.

 

https://c1.staticflickr.com/9/8373/8519201849_fc9d8a6351_b.jpg

 

A nice property within a short walking distance of a place with many jobs, and/or near many other attractions, will usually be worth significantly more than a slightly nicer place which requires a long commute to get to work, or play.

So when I look at a property, I automatically think: Where are the jobs, that will provide employment for the people who might live in my property?. Thus, when I bought in the Philippines, I bought properties in, or very near to Makati, the financial district and main CBD – that's where most of the top-paying jobs are! My main purchase in Kroma Tower will be part of Citygate which will transform Makati North. Alveo Financial Tower will be part of the CG complex when completed in 2020. It was launched for sale in October 2015, and the available supply was quickly sold out, at P.200-220K per Square meter. My purchase of a 1BR flat at Kroma was made almost two years ago, and the cost was just P126K psm. It was a high floor with an open view. I am considering to live there, but if not, I expect it will be easy to rent out at an attractive yield. It is on a walkway that attaches to Greenbelt, Makati's very nice mall. This is a good example of how ease of transport (a walkway!) can help drive property valuations.

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MEETING #2 : Plan & email

 

1/9/2016 : Sat Night: 7-9pm - at (usual venue)

Looks like Sat Night is best, so let's go with that...
And we should be able to have M. join us, and also D. and M. just prior to their trip to Manila, so that's all good.

W. has commented on the Agenda, and likes most:
+ How to play the drop and recovery? What is Info required to monitor the HK property market
+ Signs of high rise construction in Philadelphia? Discuss the Map and the transport angle

(Links, Maps to follow from me)

 

He/ W. will talk to us about:
+ The current development of the P2P lending space and crowdfunding in the real estate sector.
(I am very curious about the time frame of loans, collateral, and docs used for P2P)

I also want to talk about Philippines, since M,D &M may all be there.
I will ask M to comment on how he sees the footrace between Com'l and Res'd property in BGC & Makati (see PS)

And other Agenda items to add? (Pat had a comment: see PS-2, below)
Is anyone bringing anyone new?
Thanks,

==
PS-1 : Footrace:

I have put together some numbers, which show compare SqM of Com'l property with numbers of Condos in various locations. My overall conclusion is that the new office space will bring jobs, and the jobs will bring new demand for housing. So the market may stay in reasonable balance, with new tenants nearby the offices provding some workers, and demand. Biggest concerns: almost no new offices in Mak, in 2016-17; the shrinking ratio in BGC; and the likelihood that traffic between Mak and BGC will just keep getting worse. Can Mash comment please
> Link- see post #215 : Keeping a Balance ? : OFFICE space versus RESIDENTIAL flats
http://www.greenener...c=18811&page=11
=
PS-2 : Opportunities:

HK property and stocks are now under pressure. Yields on both are low. Yield on Gold is nil. Where else, if anywhere, can people get reasonable cash returns?

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As China falls.... HK's Property share index (HPI) tests support

 

ShComp : 3,125.00 -236.84 : - 7.04% > L of Yr: 2,850.7
HK - HSI : 20,363.8 -617.00 : - 2.94% > L of Yr: 20,324
HK - HPI : 28,237.3 -479.00 : - 1.67% >
===

CN : ShComp ... 10-years : 3-Yrs : xx

ShComp_zpsqe5ffwcp.gif

 

HK's HPI ... update : 28,219

HKhpi-15yr_zpswn4gbmax.gif

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1/9/2016 Meet-up topics :

+ How to play the drop and recovery? What is Info required to monitor the HK property market
+ Benefits of high rise construction in Philadelphia? Discuss the Map and the transport angle

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

 

Topic #1 : Monitoring the HK Market, seeking opportunity

========

+ Problem: Where's the market? In falling mkt., "last done" may not be the real market

 

+ Bellwethers- the liquid estates: (at 12/28/14, 09/13/15*, and 01/03/16)
.

: Bellwether ---------- : 2014ye : -Peak : - Last- : vsPeak : Twrs :

: Centaline Index*------ : 132.45 : 146.92 : 135.83 : -7.55% : index peak 9/13
: Taikoo Shing- : HKisl. : 13,301 : 15,181 : 12,283 : -19.1% : 61-t : peak: 10/04
: HengFaChuen: HKisl. : 10,447 : 12,663 : 11,005 : -13.1% : 48-t : early peak: 7/26
: LOHAS Park-- : NTE . : $6,296 : $7,284 : $6,624 : -9.07% : 50-t : Dec. Average
: City One, Sh.- : NTE . : $9,896 : 11,250 : $9,661 : -14.1% : 52-t : peak: 9/06
: Laguna City--- : K- C. : $8,509 : $9,937 : $8,524 : -14.2% : 38-t : peak: 9/13
: Mei Foo S.Ch- : K- C. : $8,103 : $9,153 : $8,462 : -7.55% : 99-t : early peak: 4/05
: WhampoaGdn : K-HH : 10,925 : 12,774 : $9,700 : -24.1% : 88-t : early peak: 6/28
: Park Avenue-- : K- W. : 12,582 : 13,569 : 13,207 : -2.67% : 09-t : peak: 8/09
: Caribb.Coast - : NTW. : $6,141 : $7,577 : $6,519 : -14.0% : 13-t : p: 8/30; Tracks LHP?
===================

> largest Estates: https://en.wikipedia.org/wiki/Private_housing_estates_in_Hong_Kong

 

CL-TKS_zps9nntn1jc.png

+ Tracking bank valuations: Following the LHP > CC Mtr Line

 

Area === : TKO-CHt: TK*TsW : TKT-CPk: TY-TVrd: TC-CrCs: Tkt-IsHV: PrspG*KC:
========

12/31/13 - : $7.540M: $6.070M : $11.46M: $8,460M : $4.040M: $9,630M : $6.370M :
12/31/14 - : $8.620M: $6.850M : $12.72M: $9.390M : $4.460M: $10.48M : $7.000M :
Aug- 8/15-: $9.190M: $8.040M : $14.00M: $9.960M : $4.830M : $11.81M : $7.650M :
Oct- 10/31: $9.050M: $7.950M : $13.41M: $10.11M : $4.930M: $11.84M : $7.650M :
Dec- 12/31: $8.910M: $7.380M : $12.90M: $9.800M : $4.740M: $11.46M : $7.320M :
01/09/16 - : $8.820M: $7.380M : $ 12.90M: $9.700M: $4.740M: $11.46M : $7.320M :
Area === : TKO-CHt: TK*TsW : TKT-CPk: TY-TVrd: TC-CrCs: Tkt-IsHV: PrspG*KC:
Tower / Fl. : Tw3-30C: Tw3-25C: Tw3-30C: Tw3-30C: T3-30C : Tw3-30C : Tw3- 28C :
==========:

Chg.vsPeak - 3.05% : - 9.21 % : - 7.86 % : - 3.07 % : - 3.85 % : - 3.00 % : - 4.33% :
Gross S.F.- : 0,899 sf : 0,585 sf : 0,943 sf : 0,951 sf : 0,680 sf : 0,945 sf : 0,719 sf :
$ per SF--- : $ 9,811 : $12,615 : $13,679 : $10,200 : $ 6,971 : $12,127 : $10,181 :
Centaline---: $ 9,421 : $12,283 : $13,207 : $10,090 : $ 6,454 : $12,641 : not avail. :
BV - CL ----: + $ 390. : + $ 332. : + $ 472. : + $ 110. : + $ 517. : - $ 514. :

======

LOHAS : TheCapitol
T3-30-LC : $5.05Mn / 683sf = $7,394 psf (-$6,624) : +$770
T3-30-RC : $6.06Mn / 901sf = $6,726 psf (-$6,624) : +$101

 

TKS- LHP : (53.9%) : $12,283 - $6,624 : $5,659 Difference

: $5,659 /$250 = assumes: 22.6 minutes? extra travel

: $5,659 /$200 = assumes: 28.3 minutes? extra travel

 

 

Topic # 2 : High- rise construction & the Transport angle (Philadelphia)

========

The basic Concept:
The fewer steps, and the less time it takes someone to get from their (nice) home to a high-paying job, the more valuable is that home.

So changes that should add value to a Residential home would be:

#1: Building more office space nearby, which will attract good commercial tenant - bringing good jobs to the area
#2: Building new, better, and faster transport connecting offices to homes

The way to play this, is to piggyback on big investments of others; investments in transport, or in new office skyscrapers.
Here's a table showing the major new projects coming to Philadelphia

Number of Floors in high rises: 932 fls., 38 Bldgs (ave. 25 floors)

Incl. Offices & Univ. buildings: 315 fls, 12 Bldg. (ave. 26 floors)

.
Status ------ : Compl'd : Building: Preparation: Totals---
AREA ------ : Off : Res / Off : Res / Off : Res /
Center City : 052: 078 / 059: 201 / 052: 177 / -----------> 1br:$1760, 2br:$2695 (1900 Arch)
UniversityW : 072: 097 / 059: 023 / 021: 000 /
Temple ----- : 000: 041 / 000: 000 / 000: 000 /
TOTAL ----- : 124: 216 / 118: 224 / 073: 177 / 315: 617 /
# Buildings- : 007: 010 / 003: 011 / 002: 005 / 012: 026 /
Ave # floors : 018: 022 / 030: 020 / 037: 035 / 026: 024 /

 

MAP - look at the Transport ! Key thing, starting more HR construction along MFL
PhillyCC-2_zpsecp8borp.jpg

Map

CenterC-Trans-40pct_zpsvnk67twq.png

 

Photo - Trolley to the left - capacity issues. compared to MFL?
WestPhilly3_zpsvha8agyw.jpg

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Possible Topic #3: Philippines, will 2016 & 2017 be Down Years? (in rents?, in prices?)

 

fort-bonifacio-location-map.jpg

 

BGC-004.jpg

 

High construction of Offices and Residential properties in Makati./BGC - The balance is shifting, who benefits? (MM?)

 

LATEST
Location : End2014/ 2015F: + Pct. / 2016F : + Pct . / 2017F: + Pct. / 2018F / 2019F
=======
Makati - : : 18,337 / 1,000: +05.5% / 4,148: +22.6% / 2,962: +16.2% / 1,072 / 0,598
B.G.C. -- :: 19,427 / 2,779: +14.3% / 6,931: +35.7% / 4,125: +21.2% / 2,831 / 2,482
Ortigas-- :: 13,820 / 2,430: +17.6% / 1,355: +9.80% / 0,899: +6.51% / 0,422 / 0,570
Rck+Ewd :: 11,707 / 0,000 : + 0.0% / 0,988: +8.43% / 0,346: +2.96% / 1,124 / 1,124
===============

Total-of-5:: 63,291 / 6,209 : +9.8% /13,422: +19.3% / 8,332: + 10.0% / 5,449 / 3,919
Tl.condos: 63,291>69,500 :--------> 82,922 :-------> 91,254 :--------> 96,703 /100622

 

Colliers expects a slight FALL in rents over the next year: (Q3-2015 > Q3-2016):
Makati: - 3.39%, B.G.C. - 3.25%, Rockwell - 1.79%

But flat prices (ie almost no change)

 

Will the speed of Office construction in BGC be a key factor ??

 

The Shifting Balance

Let's look at a simple ratio - of Office space to # of Condos, and see how it is shifting over time:

 

-------- : ------ End 2014 ------ : : ---- End 2015 -est-- : :----- End 2016 -est-- : : ---- End 2017 -est-- : : ---- End 2018 -est-- :

AREA : 0ffice /Condo: Ratio : 0ffice /Condo: Ratio : 0ffice /Condo: Ratio : 0ffice /Condo: Ratio : 0ffice /Condo: Ratio :
Makati : 2,847 / 18.33 : 155.3 : 2,850 / 19.33 : 147.4 : 2,850 / 23.49 : 121.3 : 2,850 / 26.45 : 107.8 : 2,910 / 27.52 : 105.7 :
B.G.C. : 0,975 / 19.43 : 50.18 : 1,162 / 22.21 : 52.32 : 1,477 / 29.14 : 50.69 : 1,817 / 33.26 : 54.63 : 2,000 / 36.09 : 55.42 :
comb.- : 3,822 / 37.76 : 101.2 : 4,112 / 41.54 : 98.99 : 4,327 / 52.63 : 82.22 : 4,667 / 59.71 : 78.16 : 4,910 / 63.61 : 77.19 :
Ortigas: 1,299 / 13.82 : 93.99 : 1,380 / 16.25 : 84.92 : 1,440 / 17.61 : 81.77 : 1,455 / 18.50 : 78.65 : 1,494 / 18.93 : 78.92 :
Rockwl.: 0,??? / 4.159 : ?? ?? : 0,??? / 4.159 : 00.00 : ???? / 4.159 : 00.00 : ?? ?? / 4.505 : 00.00 : ?? ?? / 4.997 : 00.00 :

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

> see post#208, #215 : http://www.greenenergyinvestors.com/index.php?showtopic=18811&page=11

 

When I examine this data carefully, I am less worried about a possible large correction, than I was before.

Main thing which lends confidence is the rapid rise in Office space, mainly in BGC.

The jump from 975k sqm at 12/2014 to 2,000k sqm in BGC at 12/2018 is a huge jump of +105 %.

 

Another point:

Those who now live in BGC and work in Makati, may find the journey back and forth getting slower, due to a rise

in Traffic between these two points with only narrow Roads (like McKinley Rd.) in between

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A new way of examining the Centaline Indices reveals much

I did some hours of work looking the Centaline Index, and the sub-indices for different estates in HK, and I found the results very revealing of what I call the "true" state of the HK property market.

I was looking to see if my idea that smaller estates were had been adjusted downwards less than the large estates - and the was definitely true. The data backs this up:

: Bellwether ------------ : 2014ye : -Peak- : - Last- : vsPeak : Twrs :
: Centaline Index*---- : 132.45 : 146.92 : 135.83 : -7.55% : index peak 9/13
: Mei Foo S.Ch- : K- C. : $8,103 : $9,153 : $8,462 : -7.55% : 99-t : early peak: 4/05
: WhampoaGdn : K-HH : 10,925 : 12,774 : $9,700 : -24.1% : 88-t : early peak: 6/28
: Taikoo Shing- : HK isl. : 13,301 : 15,181 : 12,283 : -19.1% : 61-t : peak: 10/04
: City One, Sh.- : NTE . : $9,896 : 11,250 : $9,661 : -14.1% : 52-t : peak: 9/06
: HengFaChuen: HKisl. : 10,447 : 12,663 : 11,005 : -13.1% : 48-t : early peak: 7/26
: Laguna City--- : K- C. : $8,509 : $9,937 : $8,524 : -14.2% : 38-t : peak: 9/13
===================
Average 5 Big Est.s--: 10,534 : 12,204 : 10,222 : - 16.2 % :

Other, indicative
: LOHAS Park-- : NTE . : $6,296 : $7,284 : $6,624 : -9.07% : 50-t : Dec. Ave.; not in CCLI index
: Park Avenue-- : K- W. : 12,582 : 13,569 : 13,207 : -2.67% : 09-t : peak: 8/09
: Caribb.Coast - : NTW. : $6,141 : $7,577 : $6,519 : -14.0% : 13-t : p: 8/30; Tracks LHP?

The Centaline index was down only 7.55% since the peak, and the average drop of those 5 large estates was -16.2%. Look at Taikoo Shing with 48 Towers. Somewhere in all those flats, someone will need to sell, and so they will have to find a buyer. Hence we got a -19.1% drop to $12,283 since the Peak at $15,181 (10/04). Other estates may have fewer transactions, and maybe no transactions in the last few weeks, or transactions that happened only when buyers were willing to step up. So those estates seem to be reported down much less.

I also discovered that some big estates (like Mei Foo Sun Chuen, Whampoa Gardens, Heng Fa Chuen) peaked well before the Centaline index peaked in mid-September. So they provided an excellent early warning.

The bottom-line here is that it may be more important to follow the prices reported for the large estates than the small ones, or the overall index. Otherwise the agents may sucker you-the-buyer into paying too much. Or as a seller, you may have unrealistic ideas of value.

 

(Note: I prepared this for a meeting, of my property discussion group, and so shall post this at that thread too.)

(Some of my points here are debatable - So if you read this data differently, please: BRING IT ON. Discussion is welcome.)

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MEETING #3 : Plan & email

2/21/2016 : Sun Night: 7-9pm - at (usual venue)

I am back from Manila, and missing the warmth and sunshine there - but happy to be here too.

I have two possible new items for the Agenda, and maybe one old one. We are open to adding YOUR items to the agenda, if you have any.

The NEW items:
+ How to furnish a bare unit (or not) for maximum return, and flexibility - mine in PH used as an example
+ The elevator chat for property Philadelphia
OLD:
+ Maps showing the "transport /gentrification" play in Philly; we didn't get round to it last time (see above #17)

(Links, Images to follow from me)
> see images on my PH flat in post #xx: xx
This cost P 163.5k (HKD xx) so far, was it worth it? We will talk calculations
Also, R. K. from Makati PH may come over in March, what info should he bring?
We are beginning to see some interesting "distressed buy" type opportunities in PH
.
The link to the "elevator chat" regarding Philly is here
AX: http://hongkong.asiaxpat.com/forums/hong-kong-property/threads/f2a904df-93dc-41d7-8edd-50ca0c9b51c6/the+philadelphia+property+thread/
.
Old post with Philly maps etc, are in post #17:
GEI: http://www.greenenergyinvestors.com/index.php?showtopic=20464

Any other Agenda items to add? Is anyone bringing anyone new people?
Thanks,

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Meeting 3, revised agenda: "Global Markets" / Sun. Feb. 21st, 7pm

========

Big 3: A meeting about Global markets. This one will be different.
I am getting the message from many of you, that you do not want to discuss only property. Many people are saying that Cash is king. So let's talk mainly about Global markets.

As one of you wrote:
"The global economy and property markets especially in Asia (China, HK, Singapore) looks like they will continue falling and the US fed will continue to raise interest rates. So there will be opportunities to invest at much lower prices in properties and stocks. The Philippines Peso and economy has been relatively more stable but need to be selective to get good ... values "

Here's a new agenda that I am suggesting :
+ What are the Long term Cycles suggesting: for stocks, bonds & gold?
+ Is US property counter-cyclical to Hong kong and Asian property?
+ If you make money in US property, will currency losses wipe it out?
+ Is there a genuine risk of WW3 in 2016?
=======
Keep an eye on the thread on GEI, for charts, and more material:

Example: The following Chart suggests that US stocks are now rolling over, a big move down is now due
SPX-20yr_zps2wrqe9tk.png
(Note: how the 14Mo-MA is crossing over below the 18Mo-MA, there are more charts like that.)

 

> BigThree thread : http://www.greenenergyinvestors.com/index.php?showtopic=20464

 

Reminder: we will start at 7pm on Sunday night, or ASAP after that.

Venue: the Usual place, at Festival Walk, Kowloon Tong

See you then.

P.S. It would be helpful if you RSVP, or send regrets, so I know who to expect

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More Long Term charts - to go with the S&P 500 stock chart above: Bonds, and Gold

 

Bonds / 10-year Notes

TBond-10yr_zpsok30zicq.png

 

Gold - turning up?

Gold_zpsqs0bi0it.png

> More charts/ Safehaven thread : http://www.greenenergyinvestors.com/index.php?showtopic=20632

 

Is property in the USA contra-cyclical to Asia??

 

ccli_chart3_zps8bxnqbzp.png

 

[/url]

 

What does the long term chart for the US Dollar / DXY look like?

 

12-months

DXY_zps7s4yg9rp.gif

 

USD_zpswn3dxccc.png

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CNY and China stocks ... A rally may have started in China

 

Been a while since I visited this parish....

 

Thinking:

(1) The world is focused on China being forced to devalue

(2) But I think they may be missing something

(3) The key chart to look at is JPYCNY - the Yen has devalued significantly vs the Yuan - surely this has changed China's terms of trade and also the same applies to the rest of Asia?

(4) Secondly the 'trllemma' says if u have a fixed exchange rate you can only control two of the following 3 - exchange rate / interest rate / money supply - the world is assuming that China will choose to devalue - I disagree...

 

It is interesting that you should post about China and the Yuan.

 

I think most people have been watching the Shanghai Index (in CNY) ... All data : 3-yrs : 1-yr : 6mos

ShComp-all_zpslo45rpqb.gif

 

But if you look at China stocks in HKD / USD - they have already corrected virtually the entire Bull market of 2015

 

HK-2823 / iShares FTSE A50 China Index ETF ... All data : 3-yrs : 1-yr : 6mos //

HK2823-all_zps5rxspmc0.gif

 

HSI: All : 3-yrs

HSI-All_zpsbqq5m8cz.gif

 

Can people who see this chart deny that the Bear market, or a key leg of it might be DONE already

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