The Peak



Last week, famous cartoonist Ma Wing-shing bought a house at the prestigious Severn No 8 development on The Peak for the bargain price of HK$76 million, or HK$23,030 per square foot, from a businessman who had purchased the prime property for HK$93 million just two years ago.

Ma's lightning deal - it was said he took only 30 minutes to make a decision - to acquire the property at half the price of what it might have fetched several months ago, has not only hit The Peak market like a thunderbolt, but also brought into question the pessimism prevailing here.

Who was right - or smarter - in this case?

There is no absolute answer to the question because it all depends on the individuals concerned. While only the vendor can say whether he was under financial pressure, prompting the slash in the price, the event does point to a fact many of us may miss as society concentrates on the dark side of the financial crisis.

If the stock market is used as a yardstick, one would be right in saying we are caught in a situation reminiscent of the 2003 SARS outbreak, or the 1997 Asian financial crisis. Only three weeks ago, the benchmark Hang Seng Index plunged towards the critical 10,000 level amid a spate of fire sales.

However, one might have a completely different outlook if the wealth accumulated by the people is considered.

I recall that Hong Kong bank customer deposits were slightly above HK$3 trillion during SARS, whereas they were less than HK$3 trillion during the 1997 financial turmoil.

Yet despite the stock market decline in the latest financial meltdown, deposits still total about HK$6 trillion. So it is clear that the people of Hong Kong has accumulated a lot of wealth since the past crises, and bargain hunters with the means - such as Ma - are waiting in the weeds for the right moment to strike.

Has the moment arrived finally? While it is largely a matter of personal judgment, depending on how long one is prepared to hold onto an investment, Ma's case - as well as the level of wealth in Hong Kong as a whole - may show that the fundamentals are obviously better than they were five years ago.

The cartoonist was not the only buyer interested in The Peak home. But the others lost to Ma - not because he offered a higher price, but because he could pay in cash, thus giving the seller a shorter completion period.

As soon as the property purchase was brought to the public light, Ma was approached by a number of agents, who said they had clients willing to offer HK$80 million to HK$90 million for the house, which would give him an instant windfall of more than HK$10 million.

He flatly rejected the overtures.

An insider said that the vendor instantly had seller's remorse on the same night, wishing the deal had not been signed. But it was already too late for anyone to back out, as it was considered a done deal.

In the past several days, a property tycoon sounded very optimistic that the real estate slump will bottom out before the end of the year.

But it is hard to say for certain which way the ship will list. It all depends on one's perspective
.   - 2008 November 10     THE STANDARD


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