$1.3 Million for a Tiny Flat? Another Scorching Weekend for Hong Kong Housing

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$1.3 Million for a Tiny Flat? Another Scorching Weekend for Hong Kong Housing

By Jinshan Hong
July 15, 2018, 4:59 PM GMT+8 Updated on July 16, 2018, 9:55 AM GMT+8

High demand and a record local price for Sun Hung Kai Properties Ltd. units in Hong Kong at the weekend showed that the property market is yet to cool after Chief Executive Carrie Lam unveiled a vacancy tax.

The developer sold 44 of 45 flats at a North Point site on Sunday, varying from studios to two-bedroom apartments. The prices ranged from HK$10.25 million ($1.3 million) to HK$21.87 million, based on the maximum discounts offered to buyers.

Lam’s tax, announced last month, is another attempt to cool a property market that’s risen more than 50 percent over the past five years, adding to the risk of a sudden bust. The North Point sales show the challenge she faces: 286-square-foot studio apartments selling at HK$10.25 million set a record for the area, according to Midland Realty Services Ltd., and the developer has boosted the prices for the next 36 apartments to go on sale by an average of 10 percent.

More details in https://www.bloomberg.com/news/articles/...-announced
Specuvestor: Asset - Business - Structure.
I don't undestand why someone with HK $10 Mil at hand , would want to invest in a tiny flat sized only 286 sq ft.

$10 Mil invested in dividend paying shares at 5% yield can give income of $500,000 = $40,000 per month . enough for renting a 1000 sq ft flat.
(17-07-2018, 02:50 AM)soros Wrote: I don't undestand why someone with HK $10 Mil at hand  ,  would want to invest in a tiny flat sized only 286 sq ft.

286 sq ft is 26.57 sq m, or equivalent to a square area of 5.15 metre x 5.15 metre. Just the size of a decent hotel room!
Population growth in Hong Kong has been very limited, about 0.6% annually over the last few years. Yet 15 years ago there were masses of flats for sale and you could (I did) pick up an older flat of 500 sq ft for not much more than S$100,000. Now after 15 years of very slow net population growth (and some continuing building) there is a huge shortage and prices are at unbelievable levels. The result of a conjunction of Mainland money looking for a home and the dollar peg, which imports US monetary policy into Hong Kong. So 10 years of ultra low interest rates in an economy with tanker loads of cash sloshing around, and prices for real estate are insane. It is terrible for the young people. At these levels, most of them can only pray that they will get a government rental flat, eventually. Let's see what tighter controls in China and steadily increasing interest rates in the US do. It might get very sticky for those who buy at these levels, but then Hong Kong has been through a regular pattern of boom and bust real estate cycles.
Just like hawker centre tender, the price of land should not be purely decided by the highest tender.
The design, environmental friendliness, the cost, and the sale price of each unit should be taken into account when each piece of land is released for tender.

Letting the developer decides their profit level is a recipe of disaster, they will just slap a profit margin over whatever current cost and squeeze as many units into the piece of land. The end result is a monotonous condo design that maximizes the profits.
I'm just glad Im not a HKer. Buy or sell wrong time in past 20 years will ruin life... not even purely investment
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)

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