Hong Kong Property is GOING PARABOLIC
A mad rush into property has started here
= = =

THE WEAK DOLLAR and tight supply of Newly-completed flats coming onstream...

Has caused the HK Builder stocks to psuh up in a parabolic move ... update


I am also hearing that the physical market is shooting up on massive demand

For example, at Caribbean Coast in TC, as of Sunday there were 71 properties sold in October (so far) versus September's more normal 40.
That's a virtual doubling of sales since last month.

Hong Kong's property situation is VERY different from the UK now, and also different from the UK in 2001.

Here are the differences - important to my cyclical and global point of view:

+ In 2001, the UK market was 7 years into its cyclical recovery, while HK is now 3-4 years into a cyclical upswing, and that's AFTER a 70% drop from HK's 1997 peak. (by comparison, the UK had a mild downturn after 1989-90, not a severe cleanout like HK.) So maybe you should be comparing HK now with the UK in 1998 or so,

+ HK banks are still cautious towards property, while the UK banks were already beginning to lend aggressively in 2001. Meantime in HK, banks are reluctant to lend more than 70%, and even at 70% you need to give convincing evidence that you can repay the loan,

+ HK incomes are shooting up, and rents are rising too. Currently, rents are rising about 15 % per annum,

+ In Hong Kong, debt is being eroded fast, as the US dollar collapses, and drags the HK$ down with it,

+ On HK's doorstep is China, and the Chinese are now seeing currency restrictions lifted, making it easier for them to invest in HK,

+ UK Builder shares peaked in Dec.2006, and are now in the midst of a severe collapse- down over 50% in many cases. In HK, the major builder stocks are up 40-50% or more since January, and are still rising.

Difference circumstances, and HK offers a better opportunity by far. We do not need to see out-of-control lending to get further rises in HK. If we do get them, the party could become outrageous, and HK prices may go back to being the most expensive in the world.

Dr Bubb

Thanks for continuing to post here - I have found very interesting and informative

Despite being UK based (albeit owning overseas investment property) I am very interested in HK market for further investment property purchase and rental. My likes are wall of money driving prices higher, exchange rate of HK$ to £, potential for rental and capital growth, direction of US interest rates, favourable tax position, landlord bias, financing costs and a few more besides.

On the negatives are current yields, US$ collapse and lack of specific local market knowledge. I plan to visit in around 3 weeks to look more closely. I'd be grateful for any tips you may have for example
where can the better yields be found in the territories location wise, how prevalent and competitive IO mortgages are (ie UK buy to let equivalents) and any areas you would recommend concentrating on. Yields I have seen so far are in the 4-5% mark which seem too low to my gut feel - looking more for the 6-7% range as a threshold. Any advice or recommendations gratefully recieved?

Freedomfinder

We can meet if you like, and if you are willing to visit Tung Chung.
Having said that, I may be wawy in London when you arrive.

I also suggest you take a look at the other HK thread here, and all four HK property threads on GEI.

/see: GEI property threads

Many thanks for posting the various links. It took a little time to work my way through but as a result I have a better appreciation of the market now. It certainly appears to be moving up very fast at the moment particularly judging by the latest Centanet data.

I'd be delighted to meet up if dates work out for you. I plan to be in HK from Sunday 9th until Tuesday 12th December to get a feel for the market and can join you in Tung Chung for a coffee and chat as suits.

freedom finder

Don't hesitate what areas you guys think are best after all the research .. Joke

hong kong is looking good and something I hadn't thought about. I'd be interested in the best property websited selling hong kong property. If you have it?

Hi
The link to the hong kong website doesnt work and just directs you to another part of this forum
Can you please help?

Also is there not a restriction on Uk investors purchasing property in hong Kong?
Thanks

I am aware of no restriction.
But it may prove difficult to get finance. And without finance, the investment is much less attractive
(especially given the weakness in the HK$- which is tied to the US$)

Here's a link to the HK Property thread on GEI

SUPPLY OF NEWBUILDS - way below "normal level of 20,000"...

Posted by Patrick Yiu (25 days ago)

Don't forget Tung Chee Wah's 85,000 units, we have had only 30,000 supply before his great plan. Now, we have only app.1400 in HK island, 4000 in N.T and 4000 in Kowloon for the coming 2008. Plus the remaining units accumulated not more than 20,000.

Real estate value do out-raised rent in some area, such as Mid-Level Central, South Side, Peak and Pokfulam. Pick Scenic Villa of Pokfulam for sample, Aug 07 was only $22M, this month was sold for $25M for a lower floor with the same size. 15% increase in 3 months.

Area like Mid-Level West, Happy Valley, Discovery Bay, and Sai Kung probably not jumping as quick and still have some bargain.

/source: http://hongkong.asiaxpat.com/forums/proper...eads/110579.asp

- -

HK's APPROACHING PROPERTY SQUEEZE - from today's SCMP, pg.P1:

HK to face shortfall in flats amid rising prices

One veteran analyst warned of a possible re-run of the property bubble...

Limited land releases in the past few years meant home supply in the pipeline for the next three years was down to just 12,000 units per annum, warned BS joint head of Asia property research Eric Wong.

This compares with up to 20,000 to 25,000 new housing units coming onstream every year over the past decade.

"If the government does not review its land supply policy, we are headed for a severe shortage of supply," he said.

...To avoid that, the government should lower its reserve privce on application lists of properties available for redevelopment, he said

((Remember: this supply squeeze is developing at a time when the link between the HK$ and the US$, and the Fed's efforts to ease a liquidity shortage are combining to force HK$ interest rates lower along with US rates.))

Centaline and Midland are two of the biggest agents.