HK Prop Mkt

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HK buyers queue for new homes after price drop
HONG KONG — On a Saturday morning last month, thousands of people waited, crammed into Hong Kong’s Fortune Metropolis mall across Victoria Harbour from the main business district, their eyes locked on large elevated screens.

Cheers erupted when numbers flashed, indicating lucky ticket holders in the crowd. They had paid HK$150,000 (S$24,000) to enter a lottery that prioritised buyers of apartments at City Point, a seven-tower development where prices for the first batch of units to be launched were more than 10 per cent cheaper than recent transactions at nearby developments.

More than 5,000 hopefuls vied for 442 units, or about 11 for every home that went on sale that weekend, in a further sign that Hong Kong’s property market may be starting to pick up steam again: Housing sales are rising after government efforts to cool soaring prices led transactions to plunge last year to the lowest since at least 2002.

But a drop in mortgage rates and discounts from builders are helping to win back buyers of new homes after prices fell as much as 20 per cent since last October.

In February last year, the government doubled the sales tax on properties valued at more than HK$2 million, its harshest measure in its bid to reel in prices and speculation. Prices had almost quadrupled over the past decade, spurred by a shortage of apartments and an influx of Chinese from the mainland.

“Six months ago, I was certainly more cautious than I am now in terms of pricing,” said Mr Peter Churchouse, founder of property investment firm Portwood Capital. “You can understand why people are coming back into the fray. You’ve had 12 months or more of suppressed demand.”

Mortgage rates have also been falling since 2011 when they hit an average high of 2.45 per cent in October.

Rates were averaging about 1.96 per cent in May this year, said mReferral Mortgage Brokerage Services. This helped new and existing home sales last month to reach 5,960 units, the highest since February last year, government data showed.

While the number of existing-home transactions has not recovered, the downward price pressure may be over, said Mr Jonas Kan, an analyst at Daiwa Securities Group, in a report. “There have not been that many units asking for notably lower prices over the past 15 months, and many of them have been taken up in the past few weeks,” he said.

Hong Kong’s existing home prices have bottomed after falling as much as 5 per cent from a peak in March last year, said Citigroup. New home prices have dropped by 15 to 20 per cent since last October, said JPMorgan Chase.

“Transaction volume has picked up and take-up remains keen for new launches, so we expect developers should have room to gradually narrow discounts,” said Mr Alfred Lau, an analyst at Bocom International.

Hong Kong developers, which sell new apartments in phases before completion, may put 15,000 units up for sale this year, said Centaline Property Agency. This would be a 54 per cent increase from 9,753 units last year, an 18-year low.

“Developers have, one after another, positioned themselves for launches, especially the larger projects,” said Mr Thomas Lam, head of valuation and consultancy at Knight Frank in Hong Kong.

There are also signs that the positive sentiment is spreading to other parts of the market: Prices of existing homes have risen 1.9 per cent so far this year, an index compiled by Centaline showed.

However, volume has yet to recover in the same way, which may be clouding the true picture of that part of the property sector.

“The second-hand market is dry, so it’s very hard to rely on it as an accurate indicator,” said Ms Eva Lee, a Hong Kong-based analyst at UBS. “The price right now is not a real market price. The primary market is the one with movement, and if developers want to sell today, they have to price (units) 10 per cent below market.”

This was reflected at City Point, which drew big crowds after its offerings were priced attractively.

Inside Fortune Metropolis mall, buyers in a snaking queue waited to pick a home from a display board after their tickets were drawn. Red stickers on the board revealed a dwindling number of apartments available. People jostled, pointed and shouted for the unit they wanted.

Ms Hayley Kam, a 24-year-old teacher, was in the line with her father as they made their third attempt to buy a City Point home. “There aren’t many first-hand apartments for us to choose from,” she said. BLOOMBERG
HK home property prices continue to defy gravity

Surge fuelled by thriving economy, as well as strong demand from mainland Chinese and limited land supply

20 Nov5:50 AM
Hong Kong

THERE are breathtaking views of Victoria Harbour from a 23rd-floor apartment that recently sold for US$722,000 in the new Le Riviera building. The high-end German appliances and marble countertops evoke European luxury. In the entrance of the building, colourful wire mesh sculptures by Spanish artists hang from the ceiling.

There is just one catch. The apartment is only 275 square feet (25.5 square metres), with a bedroom just large enough to accommodate a double bed.

"If we don't buy now, we might not be able to afford it later," said Frank Wu, 60, the new owner of this so-called microflat in Shau Kei Wan, a former fishing village on the northeastern edge of Hong Kong Island.

Real estate in Hong Kong defies logic. The city is one of the most expensive places in the world to live and it has smashed one real estate record after another for years. As property costs continue to soar, even once improbable living spaces are now getting snapped up at astronomical prices.

At Le Riviera, three-quarters of the units sold so far have been microflats like the one Mr Wu purchased. And Hong Kong developers are putting smaller and smaller units on the market - one recently built 165-square- foot apartments.

But the housing boom, and the inequality it has exposed, has been taking a toll. The high property costs faced by young people added to simmering discontent that prompted tens of thousands to take to the streets in pro-democracy protests this autumn.

For many young adults who live packed and stacked in with their parents, it is becoming harder to imagine having a place to call their own. Rents have skyrocketed. And some here now worry that the real estate market could stumble, particularly if the US Federal Reserve starts to raise interest rates next year. Lending in Hong Kong is tied to the American rates.

Speaking in her office down the street from the Le Riviera, To Pui-lui, a real estate agent who has sold two units of similar size in the building, hints at looming trouble ahead. She recently advised her daughter, a doctor, against buying right now.

"It'd be disastrous if the price falls from such a high point," Ms To said.

From a low point of Hong Kong's property market in 2003, average house prices have increased by more than 300 per cent, according to data from the Centa-City Index, which is compiled by the real estate agency Centaline and the City University of Hong Kong.

Helping to propel this rise has been Hong Kong's thriving economy, which significantly expanded over the last 10 years after the rapid growth of China. Strong demand from wealthy mainland Chinese and limited land supply have also helped to prop up prices, although this effect has slowed since the government put into effect a series of cooling measures, like additional taxes paid on property purchases.

First-time buyers now dominate the market, spurred on by the ultracheap interest rates.

"The mortgage rate is below 2 per cent, so it is very attractive for the buyers," said Patrick Wong, a property analyst at BNP Paribas. At Le Riviera, only one buyer so far did not need a mortgage, according to Hip Shing Hong, the project's developer.

Mr Wu, a retired structural engineer who lives in the Mid-Levels, a more expensive part of Hong Kong Island, bought his microapartment as an investment. He already has a potential tenant, a Canadian woman whose family lives in the neighbourhood, and said he planned to charge about HK$16,000 (S$2,700), or more than US$2,000 per month.

Many middle-income families now populate areas away from Hong Kong's centre, in neighbourhoods like Kowloon East, where the commute is longer but prices are cheaper. In Tseung Kwan O, a neighbourhood to the north-east in the New Territories, new properties have recently sold for as little as HK$10,000 per square foot, about half that of the units at Le Riviera. Even in these neighbourhoods, though, prices have been lifted by the overall market.

But the frenzy in Hong Kong's property market may soon fade. The Hong Kong dollar is pegged to the US dollar, so the interest rate policies are linked. When rates go up, those who have borrowed money to finance new homes will feel the effects as their mortgage payments rise. This concern is more pronounced in Hong Kong, where mortgages are not set at a fixed rate.

"They are making themselves slaves to the property market," said Nicole Wong, a property analyst at CLSA.

Many Hong Kong residents still remember the last property bust, which was set off by the Asian financial crisis in the late 1990s. As Hong Kong's economy took a hit, unemployment rose and deflation set in, chilling prices. The outbreak of Sars in late 2002 exacerbated the descent in prices. By mid-2003, property prices had hit rock bottom.

Ms Wong remembered visiting a foreclosed apartment in 2003 where the family's belongings had been left behind. Children's backpacks were still on the table, their homework half finished, she recalled. In another room, she spotted gambling tickets.

"It was a shocking, shocking experience," she said. "You could see all that struggle of a family right before they were taken away."

Developers seem undeterred for now. They continue to build new properties, increasingly with incentives like tax waivers, which can amount to as much as a 10 per cent discount. Microapartments are a small part of the offerings, but they are growing, with a handful of developers jumping in. This is partly because the overall price tag looks cheaper than bigger units - especially farther afield from Hong Kong Island - making them more affordable to a wider swath of buyers.

Even by Hong Kong standards, the latest apartments offered by Li Ka-shing, Asia's richest tycoon, are remarkably small. At Mont Vert, developed by Mr Li's company Cheung Kong Properties, some units range from 165 square feet to 196 square feet.

Prospective buyers interested in a recent batch of similar units were not even able to see them before they agreed to buy, a common occurrence in Hong Kong.

Mr Wu, who acknowledged the risks of buying the Le Riviera flat when prices were so high, does not seem too concerned. He said that he and his wife could always move in.

Surveying the empty bedroom, he added, "It's all right for me." NYT
People often see properties as a number game and forget it is a necessity, and it will impact lifes for years to come if not an entire generation. That's why residentials should be highly regulated, including restriction for foreign buying like what Singapore has done. It's not just simple investment gain or loss.

"Ms Wong remembered visiting a foreclosed apartment in 2003 where the family's belongings had been left behind. Children's backpacks were still on the table, their homework half finished, she recalled. In another room, she spotted gambling tickets.

"It was a shocking, shocking experience," she said. "You could see all that struggle of a family right before they were taken away."
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
I agreed fully with you on regulations on ownership on property.

However, the regulation on local properties only came years after the outcry over lack of regulation that resulted in asset inflation that followed on years of ignorance.

Of course, the steps came about after Mah "stood down" and ease off into the background. The typical type of accountability that Singapore is famous of.

By then of course, IMHO, Singaporeans will start to pay for the high asset costs like what happened post AFC in 97 - 8 long years until IR proposals were floated in 05.

By then I thought policy makers would have learn a good lesson on the ill-effects of asset bubbles but of course 9 years in hindsight, music just goes on and on...

No Vested Interests

(20-11-2014, 11:25 AM)specuvestor Wrote: People often see properties as a number game and forget it is a necessity, and it will impact lifes for years to come if not an entire generation. That's why residentials should be highly regulated, including restriction for foreign buying like what Singapore has done. It's not just simple investment gain or loss.

"Ms Wong remembered visiting a foreclosed apartment in 2003 where the family's belongings had been left behind. Children's backpacks were still on the table, their homework half finished, she recalled. In another room, she spotted gambling tickets.

"It was a shocking, shocking experience," she said. "You could see all that struggle of a family right before they were taken away."
Hong Kong luxury home prices go through the roof

NOVEMBER, 2002: Crowded apartment buildings on Lamma Island, Hong Kong. Picture: John Swords. Source: News Corp Australia

High above Hong Kong, on the city’s iconic Victoria Peak, sits an elite enclave of new mansions, each outfitted with a swimming pool, grand ballroom-size living rooms and spectacular ocean views.

Three homes in the Twelve Peaks development sold in the first quarter for a combined $US180.6 million ($231.5m), or an average unit price of $US154,484 a square metre — the cost for seclusion among the dense woods near the Peak, the highest point on Hong Kong Island.

The price tops even one of the most expensive listings on New York’s Park Avenue. A new triplex penthouse at 520 Park Avenue is about to go on the market for $US130m, or roughly $US112,870 a square metre, according to the developer’s offering plan filed with New York State.

Hong Kong homes are among the priciest in the world, buoyed in part by an influx of tycoons from mainland China parking their wealth in prime real estate. Like in New York City, another epicentre of luxury properties catering to the super-rich, prices have become especially inflated near the top of the spectrum.

The strong demand for ultra-luxury apartments has triggered a boom in development. The new luxury developments in Hong Kong that have broken ground in the last three years include Twelve Peaks, Shouson Peak and Opus Hong Kong, a Frank Gehry-designed residential project.

In many large cities around the world, concern is growing that there aren’t enough billionaires to absorb all the new supply. While similar concerns exist about Hong Kong, some feel the danger of a glut isn’t as great because of the continuing influx of mainland buyers.

“The rate of growth in Chinese billionaires interested in Hong Kong properties is probably higher than the rate of growth” of HK luxury properties, Nicole Wong, a CLSA property analyst said.

Hong Kong luxury-home prices rose 5.5 per cent year-over-year to a historical high in the first quarter, according to the Knight Frank Prime Global Cities Index, which tracks the top 5 per cent of transactions by price in major cities worldwide.

Prices of upscale homes have jumped despite government efforts to cool demand with a stamp duty aimed at foreign buyers, the vast majority of whom are mainland Chinese.

The eye-popping price tags of recent sales have helped fuel developer enthusiasm. In April, a 433sq m apartment at the 39 Conduit Road tower in Hong Kong’s Midlevels neighbourhood fetched $US56m, making it one of the most expensive condos ever to sell in Asia, a notch below a $US56.6m sale in 2009 in the same 41-storey building.

The most expensive Twelve Peaks’ listing will be priced at $US105.6m. The house sits high above hectic traffic at an altitude of more than 300m, with expansive views of the South China Sea. The luxury trappings of luxury home are all there but it is the views and the prestige of living at the Peak that set it apart.

The Wall Street Journal
Hong Kong sees spurt in negative-equity home owners as property prices tumble
Virtual currencies are worth virtually nothing.
Hong Kong Home Sales Tumble 70% as Slowdown Intensifies

Hong Kong residential home sales plunged 70 percent in February from a year earlier to a 25-year low, as falling prices and economic uncertainty deterred buyers.
Last month, 1,807 homes were sold in Hong Kong, compared with 6,027 a year earlier, according to government statistics. Home sales fell from 2,045 in January, the data show.
“The newspapers keep on saying the market is going down and buyers think they can get a cheaper house half-a-year later or one year later, and so are waiting," said Thomas Fok, a property agent at Centaline Property Agency in Hong Kong’s upscale Mid-levels West district where he hasn’t made one sale this year.

Property prices have declined 10 percent from their September highs amid uncertainty over the economy at home and in China, possible interest-rate increases and plans by the government to boost housing supply in the next five years. Senior Hong Kong government officials have ruled out relaxing property curbs, which include extra stamp duties and caps on mortgage levels.
Virtual currencies are worth virtually nothing.

Hong Kong Property Market in 'Free Fall': Hayman's Bass

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Virtual currencies are worth virtually nothing.
Hong Kong Property Market in 'Free Fall': Hayman's Bass
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