One in Seven Adults on Hong Kong Island  are Millionaires

Hong Kong's prosperity -  Revenues exceed expenditures by 4x

Sixty-three percent of Hong Kong residents have internet connections and spend an average of 2.5 hours online daily, a 10% increase compared to last year, according to the Nielsen Media Index. Reading newspapers and magazines online has also became more popular. Almost half (45%) of Hong Kong's internet users regularly read newspapers or magazines online, up from 38% in 2006.- 2009 May




















Many of the reasons why so many still call Hong Kong home

After sending the children abroad for a global education and a passport abroad, Hong Kong continues to attract 'the Best of the Best'.  >>  VIDEO

That's one of the reasons why real estate is so expensive in Hong Kong.

Photo by Kenny Lok

Office Rentals in Hong Kong rose by 28.5% last year
World's most expensive real estate market

  -- 2011 March 23   SCMP

Hehe...organized chaos.  'Camping' in Hong Kong.   Photo courtesy of Glamaross.

Hong Kong Bosses Toughest in Asia Pacific

Hong Kong bosses are the toughest in the region and expect staff to work during their holidays, a study has found  - but maybe that's why they are amongst the world's richest!  

A survey of more than 1,600 professionals in the finance, accounting and human resources sectors across the Asia-Pacific region found that 68 per cent of employers in the city expect their staff to be available while on annual leave or after work hours... "Hong Kong's work ethic is intense."

Finance professionals in Hong Kong said they felt they had to stay connected in case there was an emergency, but also because they could keep in touch through technology. Some said they just could not switch off.

Hong Kong bosses expected the most from middle managers, the survey found, with 76 per cent saying middle managers should be available all the time, compared to 47 per cent for senior managers or directors and 23 per cent for junior or entry-level staff.

A positive result for Hong Kong employees was that if they did work during their holidays or outside office hours, most were compensated.  --  2011  April 17  SOUTH CHINA MORNING POST

The Chinese are Buying

Government Changes Rules on Down Payment 

The Seriously Rich

Hong Kong's billionaire tycoons enjoy a status close to royalty in Asia's wealth-obsessed financial hub.    - 2010   AFP

Hong Kong's number of financial professionals rose to  record level 37,694 in July 2010 eclipsing the previous high reached in 2008, according to the Securities and Future Exchange.   As a result the demand for luxury housing as well as premium office space is huge.

The growth is due to the fast paced PRC growth and the new wealth that ensues.   This young audience of rich millionaires treat Hong Kong as  'Must-Have' in the list of affluent possessions to accumulate.   Its real estate capital values and its growth.     

2010 December 22   SOUTH CHINA MORNING POST    

West Kowloon takes Centre Stage
The site, which is adjacent to the Tsim Sha Tsui shopping hub, will feature venues including a modern-art museum, opera house, green park, and shopping malls 

Hong Kong's US$2.8 billion plan for an arts hub in West Kowloon may cement the area's status as a luxury neighbourhood to rival high-end established suburbs across Victoria Harbour.

Cultural centre: About 36% of the real estate in the development will be venues for visual and performing arts, galleries, and studios

The 40-hectare West Kowloon Cultural District, to be designed by Norman Foster, the architect behind London's Gherkin tower, will be flanked by Hong Kong's tallest skyscraper and the terminal for an express railway to cities on the Chinese mainland. Mr Foster's selection ended almost 10 years of wrangling between the government, developers, and art groups that had held up the area's transformation.

'If you take into account West Kowloon's location and all the transportation links that'll be available in the future, its potential is huge,' said David Ji, Hong Kong- based head of research for North Asia property consultant DTZ. 'It'll be the first stop for many mainland visitors to Hong Kong, and their spending power is enormous.'

Mr Foster's plan for gardens, hotels, theatres, and restaurants will replace undeveloped reclaimed land that now mars West Kowloon's harbour frontage. Back from the water, luxury apartments including Sun Hung Kai Properties Ltd's The Arch and Hang Lung Properties Ltd's HarbourSide, have been built, along with the International Commerce Centre (ICC), which lured Morgan Stanley, Credit Suisse Group AG, and Deutsche Bank AG to move their local headquarters from Central on Hong Kong Island.

Apartments in the West Kowloon district cost more than twice those in the east London districts of Canary Wharf and Wapping, an area that lured investment banks from the City of London after Britain's tallest office tower was built there in the 1980s.

A 1,000-square-foot apartment in West Kowloon costs an average of HK$15 million, according to Wong Leung- sing, a research director at Centaline Property Agency Ltd, Hong Kong's biggest closely held realtor. A two-bedroom apartment in the east London areas is £pounds;531,000, according to Savills Plc, the UK's largest property broker.

Home prices in Hong Kong rose at the fastest pace globally in the fourth quarter, gaining 20 per cent from a year earlier, according to the Knight Frank Global House Price Index. UK home prices climbed 0.7 per cent in the period.

About 36 per cent of the real estate in the 17-venue West Kowloon harbour-front development will be venues for visual and performing arts, galleries, and studios, according to Colin Ward, a Hong Kong-based partner at Foster & Partners, whose master plan for the project was chosen by a government-appointed committee last month. The rest will be hotels, housing, and commercial buildings, he said.

The site, which juts into Victoria Harbour in front of the ICC and to the east, is adjacent to the Tsim Sha Tsui shopping hub, will feature venues including a modern-art museum, opera house, 19-hectare green park, and shopping malls.

'It's not just about culture,' said Mr Ward in an interview. 'We're making it a place where people want to go to. We're taking that and putting culture into it so we get a good mix. We don't want it to be a place just for the enlightened and privileged.' The project will add to a stable of work by Mr Foster in the former British colony, including HSBC Holdings Plc's local headquarters and Hong Kong International Airport.

The area is about a 10-minute train ride from Central and within walking distance to Tsim Sha Tsui, which houses some of the city's biggest museums and existing performing arts venue. The government plans to erect at least two multi-storey office buildings atop the express railway terminal in West Kowloon when the project is finished by 2015.

'By the time the art hub is set up there should already be a critical mass of office spaces, shopping malls, residential buildings to turn the area into a core commercial and tourist district,' said Simon Lo, Hong Kong-based director of research at Colliers International.

Average home prices in West Kowloon are HK$9,774 per square foot, having caught up with the HK$9,869 for the Western and Central districts on Hong Kong Island, including Mid-Levels, traditionally favoured for its proximity to Central.

The development is expected to be finished in phases from as early as 2015, Hong Kong's Chief Secretary for Administration Henry Tang said on March 4. The initial proposal was originated as early as 1998 by the administration of former chief executive Tung Chee-hwa.

The government began selling reclaimed land in the district for luxury apartments during the late 1990s and early 2000s, as part of a plan to spruce up areas along the railway and freeway connecting Central to the new airport on Lantau Island, according to Eddie Hui, a professor in the building and real estate department of Hong Kong Polytechnic University.

'There're a real potential for both commercial rents and residential prices to go up even more with the addition of all this hardware,' said Mr Lo at Colliers, the Seattle-based property broker. 'The area has already come a long way.'

West Kowloon lies to the west of Yau Ma Tei and Mong Kok, former blue-collar areas housing factory, dockyard, and fruit market workers. Today, they are bustling, middle-class shopping districts for everything from cooking equipment to sneakers and jewellery, electronics, and pirated compact discs. Mong Kok, one of the most densely populated areas in the world, is home to the city's biggest red-light district.

The government set up the West Kowloon Cultural District Authority to oversee the development in 2006 after the project was halted because the three bidding consortiums - including a joint-venture by Sun Hung Kai and Cheung Kong (Holdings) Ltd, the city's two biggest developers - failed to agree to the amended plan.

Named 'City Park' primarily because of the inclusion of the green park and a 2.2-kilometre seafront promenade, the plan by Mr Foster's London-based firm beat proposals by Hong Kong-based Rocco Design Architects Ltd and Office for Metropolitan Architecture, Rem Koolhaas' Rotterdam-based outfit. Mr Koolhaas helped design the CCTV Tower in Beijing.

The three, each paid HK$49 million (S$7.94 million) by the government for their designs, were short-listed from among 12 firms which were in turn picked from a pool of 109. Mr Foster was also behind the original design shelved in 2006 that featured a giant canopy covering parts of the art hub. Elements from the two losing designs may be incorporated to Mr Foster's master plan, said Ronald Arculli, chairman of the Hong Kong stock exchange and a member of the committee responsible for the selection.

While the benefits for West Kowloon are undisputed, the art hub's contribution to Hong Kong's overall economy are questionable, said Bob McKercher, a professor at The Hong Kong Polytechnic University's school of hotel & tourism management. 'This will be a project that will benefit mostly the local population and artists,' he said. 'Normally, an art hub project of this sort only has limited impact on tourism unless there're certain thematically driven festivals.'

The number of Chinese visitors rose 26 per cent in 2010 to 22.7 million and is expected to gain another 10 per cent this year, according to the city's tourism board. Chinese buyers accounted for more than a third of new luxury home purchases in the second half of 2010, according to Centaline Property Agency Ltd, the city's biggest closely held real-estate agency.

'The area is going to get only more popular among mainland visitors,' said Simon Smith, Hong Kong-based head of Asian research here at London-based Savills Plc. Luxury home prices in popular areas such as Mid-Levels and Happy Valley on the Hong Kong Island 'will find it hard to keep up with that of West Kowloon'. -- 2011 April 7      Bloomberg     >>  ARCHIVE | BACKGROUND


Sales of luxury goods and prices of homes jump, on the back of record numbers of visitors from the mainland.

Hong Kong is an international city, and that shopping atmosphere and environment is fantastic,' said Ms Ju, 29, who carries a shopping list from her friends in Lanzhou. 'The stuff in Hong Kong has higher quality. It's so cheap.'

Mainland residents, their wealth bolstered by an economy that grew at the fastest pace since 2007 in the fourth quarter, are visiting Hong Kong in record numbers and spending on luxury. February retail sales rose 36 per cent from a year earlier, the fastest pace since 1988, the government said. They are also paying record prices for apartments, prompting the government to warn of a property bubble.

'The Hong Kong retail market would absolutely be devastated if Chinese consumers stop visiting,' said Kevin Lai, economist at Daiwa Capital Markets Hong Kong Ltd. 'Half of the crowds in those shopping areas would disappear.'

China's economy, the world's third-biggest, expanded by almost 11 per cent in the fourth quarter of last year after a four trillion yuan (S$815 billion) stimulus programme and US$1.3 trillion in new bank lending at record-low interest rates. The number of mainlanders worth at least 10 million yuan rose 6.1 per cent this year to 875,000, according to the Hurun Wealth Report.

The wealthy are finding their way to Hong Kong, a special administrative region of China with different financial and legal systems. Tourist arrivals from the mainland gained 49 per cent in February from a year earlier, driving total visitor arrivals to a record 2.87 million for the month, the Hong Kong Tourism Board said.

Sales at department stores that month surged 49 per cent from a year earlier, and sales of luxury goods such as jewellery and watches jumped 48 per cent. China imposes taxes of at least 30 per cent on cosmetics, 20 per cent on high-end watches and 10 per cent on golf equipment, according to the State Administration of Taxation. Those items aren't taxed in Hong Kong.

Ms Ju visited during Lunar New Year in February and bought a HK$6,500 (S$1,170) Gucci handbag and Dior mascara. She said she spends as much as HK$50,000 each trip on handbags and clothes by LVMH Moet Hennessy Louis Vuitton SA, Gucci Group NV and Burberry Group plc. She also buys diamonds, cameras and cosmetics.

The amount Ms Ju said she spends each trip is more than double China's average urban per capita net income of 17,175 yuan, based on National Bureau of Statistics figures.

Mainland money has also helped fuel a 45 per cent jump in prices of Hong Kong luxury homes last year, real estate broker Savills plc said. About 19 per cent of the people buying luxury properties, or homes worth more than HK$10 million, were mainlanders, according to Centaline Property Agency Ltd.

That helped the city's economy grow by 2.6 per cent in the fourth quarter from a year earlier - the first gain in five quarters.

Henderson Land Development Co sold an apartment for a world-record price of HK$88,000 per square foot.

The surging prices prompted Financial Secretary John Tsang to warn of a bubble. Hong Kong's central bank subsequently raised the minimum downpayment required for homes worth more than HK$20 million, and the government said it would raise stamp duties on luxury residences and release more land for development.

Local house hunters Jennifer To and fiance Henry Chan say the unprecedented prices are spilling into the mass market and putting starter homes out of their reach.

Ms To, a law student, and Mr Chan, a hedge-fund analyst, said they shopped for apartments last year and found prices of HK$6,000-HK$7,000 per square foot. When they returned this year, prices were HK$10,000.

'Property prices in Hong Kong are being pushed up by mainland Chinese,' said Ms To, 29. 'You've got all these rich people buying up everything and normal people can only afford to rent.'

Stores also are feeling the effects as rents rise in malls popular with mainlanders. IFC Mall, connected to the Four Seasons Hotel, said monthly rents rose 25 per cent last year to between HK$250 and HK$620 per square foot. Increases of between 10 and 25 per cent are anticipated this year, Karim Azar, assistant general manager of IFC Management, said in January.

'The mainland's hot money today is blowing a property bubble in Hong Kong that is similar to the one seen around 1997, only with a much bigger lung,' said Tao Dong, Hong Kong-based chief regional economist at Credit Suisse Group AG.

Spending by mainlanders typically makes up about 30 per cent of sales for stores in the Central district, said David Martin, head of retail at Hongkong Land Holdings Ltd, which owns the Landmark and nearby malls with luxury stores.

Mainlanders are more confident that Hong Kong stores aren't selling forgeries, said Paul Law, financial controller of Luk Fook Holdings International Ltd, with more than 500 jewelry stores in Asia and North America.

Hong Kong is the biggest market for Swiss watchmakers, who exported 225.1 million Swiss francs (S$296.5 million) worth of timepieces to the city in February, 17 per cent more than a year earlier.

'The 'three flows from China', which are goods, visitors and capital flows, are driving the local economy tremendously,' said Daiwa's Mr Lai. 'Mainland China has so much cash that it can easily push the city's economy up.' - 2010 April 14    Bloomberg

Where The Seriously Rich Live

The government on Aug 13 raised down payment ratios and said it will increase land supply amid concerns housing is becoming unaffordable after a 45 per cent surge since the beginning of 2009.

Kerry Properties Ltd paid HK$1.29 billion (S$223 million) for a plot in the Kowloon Tong district, setting a per-square-foot record for Kowloon.

Hong Kong's home prices have surged about 45 per cent since the beginning of 2009 on record low mortgage rates and the influx of wealthy PRC (People's Republic of China)  buyers.  

An active property market in Hong Kong although it has proved in the past to be volatile but also amongst the first to bounce back and  it is susceptible to the shocks of unexpected flows of international capital.     Having said that though land supply is short and interest rates are low. The past 12 months have seen a massive 33 per cent rise in the property market, making it the highest growth rate in the developed world.     This cosmopolitan business centre is famous for doing business.

In 2010 Hong Kong increased a requirement for down payments on luxury homes from 30% to 40% and cracked down on deceptive marketing by developers after officials expressed concern that prices were rising too fast.  Developers disagreed as they are the ones with direct contact to the PRC money that has been flooding into the territory.

Since December 2008 property has been something else. The benchmark residential property index is up by 46 per cent the steepest trajectory since the mega-bubble of 1997

The usual factors apply: tight supply, strong personal balance sheets, plus inflows of speculative capital, particularly from the mainland. What is new this time is the ultra-low cost of borrowing, imported through the peg to the US dollar. Rental yields of between 2.5 and 3 per cent for the luxury segments are at post-97 lows, but effective mortgage rates are even lower.

The financial logic has proven more powerful than cooling measures from the Hong Kong Monetary Authority. On Wednesday, Sun Hung Kai, the worlds largest developer by market capitalisation made another significant land purchase, at a higher than expected price. On Thursday, the best six performers on the Hang Seng were all property stocks.

Hong Kong's powerful property tycoons exert considerable influence over the city, and there are signs that this sway is growing with positions they control on advisory and statutory bodies increasing threefold since the handover.  Fortunately we have direct links to the largest (many who are Friends) ;-)   


The South China Morning Post ran a story about the number of directors of property developers who sit on statutory advisory boards [SABs], suggesting that they account for 1% of all seats on SABs, and that these tend to be the more economically important seats.  - 2010 April 13

Another reason PRC like to park money in Hong Kong is its appeal as a Lifestyle destination and inflation is high in China.

Hong Kong developers are ca$h-rich and ready to hold out for top prices.  

Hong Kong has 'Can Do' expertise and a Team and Record to support it

New Rules Hit Property Developers

Tougher-than-anticipated measures to curb Hong Kong's soaring real-estate prices began rippling through the market, driving down shares of property developers and prompting forecasts of declining home sales.    

The stamp-duty increases - a 15% charge on property sold within six months of purchase, 10% for those sold within six and 12 months, and 5% for those sold between one and two years - could result in lower property prices, and rents would follow similarly but the shares of the property developers were affected immediately.

- 2010 November 23    WALL ST JOURNAL

Global fears could curb prices at Land Auction

The latest global credit turmoil and the Hong Kong government's stated intention to crack down on property speculation might put the brakes on bidding at tomorrow's (May 11) government land sale, say some analysts.

Up for auction is a 282,000 sq ft waterfront residential site in Tung Chung on Lantau Island that was expected before the latest global financial crisis to fetch as much as HK$4.75 billion (RM1.96 billion).

But some analysts have revised their expectations downwards in the wake of the fresh blow to investor confidence caused by the debt crisis in Greece, as well as the decline in sales volume in response to government plan to end rampant property speculation, and alternative and lower-risk sites up for sale.

"Sales volumes in Hong Kong are falling as concerns grow that the government here is also poised to curb property speculation, and the recent volatility on the stock market has also hurt investment sentiment," said Alnwick Chan Chi-hing, executive director at property consultancy Knight Frank.

Chan has revised downward his original forecast that the site, which will provide a total gross floor area of 1.43 million sq ft, would be sold for HK$4.9 billion, to HK$4.6 billion. He also believes that in the new investment climate, the attention of developers may be diverted to more centrally located sites which are less at risk of a sharp fall in buyer sentiment.

Poorer sentiment has already dented sales, and Tony Poon Chi-kwong, general manager at Centaline Property Agency's Tung Chung branch, said sales volumes in the secondary market have plunged by 70% as both buyers and sellers postponed decisions until the results of the auction become known.

"Our firm handled just 10 to 12 deals last weekend from 40 over the previous weekend," said Poon. Bookings for viewing flats also dropped from 40 to 12 over the weekend, he said. In the present environment developers could wish to save their ammunition for better sites in more centrally located and prestigious locations," said Knight Frank's Chan.

Up for tender, he said, was the HK$33 billion Nam Cheong station commercial and residential project on top of the MTR station in Sham Shui Po, a residential site in Ho Man Tin, and another at Mount Nicholson. The tender for the Nam Cheong site closes on May 25, while the Ho Man Tin site will be offered for auction next month and the Nicholson site will come under the hammer in July.

Chan said developers would be keen to bid for the Nam Cheong project and the luxury site at Mount Nicholson, given their prime locations which would help reduce risk exposure.

But his revised forecast nonetheless remains HK$1 billion more than forecasts made by less bullish analysts, and Nelson Chan Cheong-kit, a director at Lanbase Surveyors, is sticking with his original view that the site will sell for HK$3.6 billion or around HK$2,500 per sq ft, the lowest among the forecasts.

Lanbase's Chan said he did not believe that the deterioration of global market sentiment would effect the land sale much as development of the site would take two to three years to complete.

But he agreed that bidding for the site could be affected by the increased attraction of alternative choices to developers. "The concern is that developers may now shift their interest to other sites up for grabs," he said.

The Tung Chung site was triggered for tender -- the first government land sale since December last year -- after a developer agreed to pay the minimum list price of HK$2.87 billion.

But sentiment has been dampened by warnings from the government that it might introduce tougher measures aimed at curbing property speculation, including an increase in stamp duty on non-luxury flats, a ban on reselling unfinished homes -- a practice popular with speculators who try to "churn" their purchases before taking occupation -- and requiring developers to put all flats up for sale within a certain period. 2010 May 1    South China Morning Post

Prized location: The developers - Nan Fung and Wharf - paid HK$32,014 psf ppr for the site in Hong Kong's Peak district on Mt Nicholson Road; this compares with a record HK$68,200 psf ppr paid by tycoon Lee Shau-kee's son for a site in May 2010


LOCATION:                                                     HK$ Sq Ft (US$ Sq M)*

Peak                                                                  $ 20,395   ($ 28,145)  IslandSouth                                                       $ 18,521    ($ 25,559)
Mid-Levels                                                         $ 15,181    ($ 20,950)
Happy Valley / Jardines Lookout                       $ 14,566     ($ 20,101)
Pokfulam                                                           $  15,195    ($ 20,969)

* Source:  KF-Citi Wealth Report 2010 January

Foreign investors are increasingly coming from Mainland China accounting for 10% of total sales and 30% of pre-sales on new developments.   For the Mainland new rich, Hong Kong is the Geneva of Asia.  

Peak home fetches $ 60,215 per square foot   

A Hong Kong-listed company Sino-tech International Holdings, an electronics components maker, said it has agreed to buy the 4,650 square foot property on the Peak for 280 million Hong Kong dollars (35.90 million US), or 60,215 dollars per square foot, as an investment.

A month after the government introduced measures to cool the city's property market this near-record price indicates the strength of this property market.  

The per-square-foot price is among the highest paid for a property in the southern Chinese city, after a duplex was sold by Henderson Land Development in October for an Asian record of 71,280 dollars per square foot.   The Peak property is one of the 22 houses in the luxurious Severn 8 development on Severn Road, which was named by online analysis group The Wealth Bulletin as one of the 10 most expensive streets in the world last year.   Also on the list were Chemin de Saint-Hospice in the South of France, Fifth Avenue in New York, and Kensington Palace Gardens in London. 

The near-record price was reached despite a series of measures the government introduced in February to cool the white-hot property market, such as increasing residential land supply and stamp duty for luxury flats. John Tsang, the city's financial secretary, said the government was worried that the property frenzy, supported by strong demand from rich mainland buyers and a big inflow of funds, would create a bubble and affect the stability of the financial system.

 Prices of some luxury flats returned to the peaks of the 1997 property boom in January, Tsang said.   Stimulus measures by governments around the world have boosted liquidity, which has lead to large fund inflows into Asia. China has also seen soaring property prices, with values rising at their fastest pace in 17 months in December after Beijing encouraged tax breaks, loans and lower downpayment requirements to boost the sector during a slump.   - 2010 March 18    AFP


Dominant players control market share in this market

As example, this explains the domination of several real estate players (many of the world's richest billionaires).



Metro/Urban Population: 6.8 million
Hong Kong has whopping 39 buildings over 200 meters tall. It also boasts four of the 15 tallest buildings in the world... that's all in one city! Hong Kong's skyline shows a large selection of distinct sky-reaching towers, with beautiful night lighting and reflection. This city exemplifies the post-modern skyscraper and skyline. Finally, the mountain backdrop makes this skyline one of the greatest on the planet!   A little bit smoggy though but nonetheless no less important as a world financial centre for the region and entrepot to China.    The city is entrepot for the public markets in the region.

After 150-plus years of British occupation finally ended in July 1997, Hong Kong these days is a Special Administrative Region (SAR) of China.

This means China takes care of defence and foreign affairs, while Hong Kongs own modern-capitalist government looks after everything else, including the monetary system.

In terms of job opportunities for young finance, accounting and business professionals, Hong Kong has the greatest concentration of corporate headquarters in the Asia Pacific region.

Between June 2003 and June 2007 the number of foreign companies with regional headquarters in Hong Kong grew from 966 to 1246.

Likewise, the number with regional offices in Hong Kong grew from 2241 to 2644.

Even the magnificent panoramic view from Victoria Peak, looking over the entire metropolis, would tell you this. Building upon building stretches across the horizon.

Multinationals are especially attracted to the region because of its hands-off policy in regards to the financial system.

This is also the main reason why Hong Kong has been ranked number one on the worldwide Index of Economic Freedom for the past 14 years.

It also has low taxes and, of course, unrivalled trading links and access to the mainland.

To be able to take advantage of one of the multitude of employment opportunities in Hong Kong, if youre younger than 30 and youre an Australian or New Zealander, or Irish, you can apply for the working holiday scheme.

This gives you the chance to live and work in Hong Kong for one year. The annual quota is 1000 for Australia, 100 for Ireland and 200 for New Zealand. So get in early!

You could also apply for the quality migrant admission scheme, which operates on a points system and is also quota-based. 

Applicants are required to fulfil a set of prerequisites before they can be awarded points under one of two tests, and then compete with other applicants for quota allocation.  >> HONG KONG GOVERNMENT

Luxury residential sales outperforms in Hong Kong's property market

Hong Kong's property market saw a diverging performance between the sales and leasing sectors in 2Q 2009.

The sales sector across the Grade A office, luxury residential, industrial and retail markets has been stimulated by the inflow of ample liquidity into Hong Kong, reflected by the significant rise in the sales activity.  However, the leasing sector in the four markets remained on the downside since occupational demand was weak in the midst of the ongoing global and Hong Kong economic slowdown.  These findings were analysed in the Hong Kong Knowledge Report July 2009, the quarterly report covering Grade A office, luxury residential, industrial and retail markets in Hong Kong.  >> MORE 

Grade A Office

With the high level of liquidity in 2Q 2009, investment sentiment was buoyant in the property market and a number of private investors were bold in acquiring office properties.  Since there was limited whole-block stock available for sale, sales activity focused on the strata-title office units in 2Q 2009.  This has driven up prices. For example, average asking prices for strata-title office buildings in Admiralty rose to HK$10,000-HK$13,000 or above per sq ft in 2Q 2009, compared to the HK$8,000-HK$9,000 per sq ft in the previous quarter.

However, office rentals were yet to see the positive spillover from the resilient sales market, with the average Grade A office rentals falling further by 12.1% quarter-on-quarter (QoQ) to HK$41.79 per sq ft per month as at the end of May 2009. 

The average vacancy rate across the various business districts increased slightly from 7.43% in February to 7.86% in 2Q 2009. 

"Owing to the sustained trend of corporate relocations to the less expensive offices, Kowloon East was one of the very few sub-markets to register a fall in vacancy rates during 2Q 2009," said a Director of Research & Advisory of a local brokerage firm.    One of the benchmark examples is the relocation of the office of Manulife from Causeway Bay to Kwun Tong, which will take up 247,000 sq ft in Kwun Tong 223.  Meanwhile, Central and Admiralty also registered a marginal drop of vacancy rate from 5.07% in 1Q2009 to 4.90% in 2Q2009.

Looking forward, new demand will remain weak while existing tenants are expected to look at every possible option to reduce costs.  In the next twelve months, Grade A office rentals are projected to fall 15% unless the worldwide economic recovery is quicker than expected.   >>   MORE

Luxury Residential
In 2Q 2009, there was a distinct growth in sales volume and prices in the luxury residential market.  The number of sales transactions in The Peak, Mid-levels and South Side increased over 100% during the period, while the average luxury residential price surged by 21.9% QoQ to HK$12,955 per sq ft as of May 2009.  Particularly, the average luxury residential price growth in South Side outperformed those in The Peak and Mid-levels, which registered a significant increase of 33.5% QoQ to HK$14,413 per sq ft in May 2009.

"In addition to the inflow of liquidity, the strong buying interest could be attributed to the growing optimism in the marketplace, driven partially by the significant rebound in stock market prices," said Simon.  "Looking forward, luxury residential prices are expected to see stable growth to edge up 5% or above in the next twelve months."

In contrast, luxury residential rentals fell by 4.3% QoQ and the average serviced apartment rentals dropped by 7.8% QoQ as of May 2009.  This could be explained by the uninspiring hiring expectations by multinational corporations which weakened the occupational demand for luxury units and serviced apartments.  In the next twelve month, luxury residential rentals are expected to see a downward adjustment of 3%.    >> MORE 

The number of sales transactions of industrial property rose 129% QoQ from 393 in March 2009, the lowest level since 1999, to 900 in May 2009.  Of the industrial districts, Kwai Chung/Tsuen Wan and Kowloon East saw the most active sales activity during the period.

However, the leasing market remained subdued in terms of demand and rental.  This could be attributed to the ongoing global recession and the plunge in intra-regional trade.   The total value of re-exports fell 17.1% year-on-year (YoY) to HK$565 billion during the three-month period ended in May 2009.   The gloomy external trade environment challenges the business outlook for trading and logistics companies, which are the major occupiers of Hong Kong's industrial properties.

Although individual warehouse users have taken advantage of the prevailing market downturn to upgrade their premises to prime quality warehouse in Kwai Chung with rentals staying similar to what they paid in other districts, most occupiers remained cautious about their rental expenses.  "New leasing demand was rare, while existing tenants tried to cut down their rental costs by downsizing or relocating to less expensive premises".

Although the pace of downward adjustment of Hong Kong's external trade is expected to taper off, industrial property occupants will remain conservative in coping with the uncertainties in the external environment.  Industrial rentals are predicted to fall by 5% - 15% over the next twelve months.

In 2Q 2009, locals' spending sentiment was negatively affected by the contracting economy and uncertain job market.  Meanwhile, visitor arrivals in Hong Kong dropped 3.5% YoY during the three-month period ended in May 2009.  These have dampened Hong Kong's retail sales, which recorded a single-digit fall in both April and May 2009 compared to the same period last year.

"Seeing the challenges in Hong Kong's retail market, some local and international retailers became more cautious and chose to put their expansion plans on hold," .  "Meanwhile, the retail property market was increasingly segmented.  Although individual retailers are willing to pay premium rentals for prime units in traditional shopping districts, there were still vacant shops near those prime units, even in the same street segment."

Average retail rentals in the four traditional shopping districts Central, Causeway Bay, Mong Kok and Tsim Sha Tsui registered a decrease of 4.7% QoQ in 2Q 2009.  Of the four districts, Central saw the smallest decline of 3.6% QoQ during the same period.

Looking forward, Hong Kong's retail sales still face a number of challenges, such as the slowdown in the number of inbound visitors and cautious spending by local households.  As a result, retail rentals are projected to drop further by 12% in the next twelve months.   - 29 July 09  


Hong Kong's stock market has fallen by more than 50 per cent this year, and analysts expect the economic slump to continue through at least next year. The Chinese territory is in recession, yet plenty of people there seem to be taking things in stride.

One reason is that Hong Kong has been through worse before; the last downturn lasted seven long years, from the Asian financial crisis in 1997 to the Sars epidemic in 2003. The other is a belief among some people, in and outside of Hong Kong, that the world economic order is shifting, from the West to the East, pushed by China's rapid growth and now the sub-prime financial contagion.

With the US and Europe worse off than others, there's little doubt that more capital and talent will swing towards Asia. And few places look as well-positioned as Hong Kong to take advantage of that.   - 2008 November 25   LOS ANGELES TIMES

Real estate fund puts HK$5.5b assets on sale  

Morgan Stanley Real Estate Fund, one of the big winners in Hong Kong's investment property market over the past few years, has started to offload about HK$5.5 billion worth of properties in the city. 

They include five serviced-apartment projects and the Nexxus Building in Central. The fund had been approached by potential buyers who had offered more than HK$4 billion for Nexxus Building, formerly the Hang Seng Building, sources said. 

"It is logical for Morgan Stanley's property funds to be evaluating such offers given the current market environment," a source said. Morgan Stanley declined to comment. Sources said the five properties up for tender included the Shama apartments in Causeway Bay, Wan Chai, Central, SoHo and Mid-Levels. 

Surveyors expect the five properties to be worth about HK$1.5 billion. The 110-room Shama Causeway Bay is the most valuable because of its size and its prime location.

 "The fund has been approached by various parties who are interested in buying individual properties or a basket of Shama properties," sources said. If these properties are sold, Morgan Stanley Real Estate Fund would continue to own and develop the Shama management company. In addition, the fund would only sell the properties with Shama management contracts. 

The fund bought a more than 90 per cent stake in Shama, a boutique serviced-apartment operator, in 2006 for an undisclosed price. 

The Nexxus Building has been on the market since early this year and is expected to generate a gross profit of at least HK$1.15 billion. "The value of the building has appreciated a lot and it is time to take profit," one source said.   The US investment fund, in a joint venture with pan-Asia real estate fund Pamfleet (HK) and Gateway Capital, acquired the building for HK$2.25 billion in 2006.  The consortium in September last year kicked off a HK$200 million refurbishment to maximise rental income. About 60 per cent of the office space has been pre-leased. These funds would still make a profit even if they offered a 20 or 30 per cent discount from their asking prices, he said.     - 2008 September 25

City of paranoids

Investors should be wary against the idea that tight residential supply in Hong Kong will protect prices, because demand is the key moving part and demand is set to contract violently as Hong Kong is a city of paranoids who have learned how wealth locked up in properties got wiped out during financial crisis and will react quicker this time. We expect residential price to drop by a maximum of 30% before end 09 and reiterate our UNDERWEIGHT call on Hong Kong developers. We also expect the turmoil in the financial industry to reduce demand for office space sharply and we see a 30% decline in Central office rents in the next 15 months.

What has changed?

  • Macro outlook has worsened markedly since our last sector update "Hong Kong Property - Devils in the details" in 23 June.

  • Our new house view of real GDP growth for Hong Kong in 08 and 09 has been cut to 4% and 2.1% from 4.9% and 2.6%.

  • The global credit crunch will eventually filter through in form of hike in HIBOR, and hike in mortgage rate - a shock the property market is probably not prepared for.

20-30% decline in residential prices

  • We are downgrading our residential price forecast to a 20% fall for mass-end, and 30% fall for the luxury segment before end 09.

  • Prices are already down 6.8% since the peak in March. Volume has dried up in the past three months (Jun-Aug) down 46% y-y. Rents have softened, down 1.7% since July.

  • Short term supply will be rising as speculators dump units bought last year onto the market.

  • Demand outlook is grim: hiring is slowing, job security is weakening, and wealth is being destroyed.

30% decline in Central office rents

  • We believe the bankruptcy of one large investment bank signals just the beginning of a sharp demand contraction period for the office sector.

  • The last time office demand contracted after the dot-com burst, Central office rents dropped 21% in the two quarters between 1Q01 to 3Q01.

The situation is looking very shaky, with current spot rent 153% above the HK$47psf level when the last correction cycle started.      - 2008 September 19   CLSA ASIA PACIFIC MARKETS


Consumer spending is at all-time high
On the 10th anniversary of Hong Kong's return to China, there are few reminders of British rule. Its fortunes are firmly tied to China, both as a gateway for multinationals to expand in the mainland and as a shopper's paradise for newly-rich Chinese to buy tax-free designer goods.  But skyrocketing rents and retail prices and growing problems with pollution threaten its long-term prosperity, as does the growing popularity of Shanghai and Beijing for foreigners setting up shop in Greater China.

In Asia they think nothing of redevelopment, the Ritz Carleton in Hong Kong is good example.

In 2008 (March 21) the Town Planning Board  proposed wide-ranging height limits on buildings in Mid-Levels in a move that could ease the area's severe congestion problems. 

An influx of foreign institutional investors competing with local private investors for the finite supply of premium assets led to brisk activity in the investment market.    Sale prices of scarce luxury residential apartments especially on The Peak and Island South also surged last year.

Among the notable commercial transactions  during 2007 were the sale of 45 percent of AIG Tower in Central for HK$3.65 billion, while in the residential sector, Indonesian fund De Monsa splashed out HK$240 million for a townhouse at Severn 8, which translates to an accommodation value of HK$55,000 per sq ft.

On top of strong fundamentals driving the Hong Kong economy, the discount on property prices arising out of the currency peg to the weakened US dollar will also help push up luxury residential prices between 20 percent and 25 percent, one analyst predicted.   

Consultancy Knight Frank says transactions involving office properties last year exceeded the previous record high set in 1997, with more than 4,000 units changing hands. In the fourth quarter alone, there were more than 1,400 sales deals.   - 2008 February 14     THE STANDARD

HK home sales may fall on inflation worries 
Share slide, global credit crunch could push property prices down, say analysts

Hong Kong's apartment transactions may fall to a 10-month low in July, then drop further, on concerns that accelerating inflation and a slumping stock market may push prices down, analysts said.

Transactions in 10 of Hong Kong's biggest housing complexes, used by many analysts as a benchmark, fell to 27 last week from 33 the previous week, Centaline Property Agency said. Total home sales in the city may drop to 6,100 in July, the lowest number since September, from 7,167 in June, it said.

'This will probably continue for the whole of the third quarter,' said Louis Chan, managing director of residential properties at Centaline. 'We're looking at between a 3 and 5 per cent correction in prices within the quarter.'

Home values have tracked Hong Kong's economy, peaking in the second quarter of 1997, then crashing in the Asian financial crisis, leaving many homes worth less than their mortgages for years.   The 2000 dotcom bubble burst, the Sept 11, 2001, terrorist attacks and the 2003 Sars epidemic caused prices to fall as much as 70 per cent from the peak. The rebound started in late 2003 and prices doubled in the past four years.

Now, the benchmark Hang Seng Index has fallen almost a third from its record in October as credit-market losses climbed worldwide, threatening global economic growth even as inflation accelerates in Hong Kong. The combination could deter potential homebuyers, possibly for the balance of the year.

'The Hong Kong residential market will go into a quiet period for the rest of 2008,' said Cusson Leung, a Hong Kong-based analyst at Credit Suisse. His July 8 report forecast a 5 to 10 per cent reduction in home prices in the second half.

Overall housing transactions in the second half may fall between 20 and 30 per cent from a year earlier, said Patrick Chow, head of research at real estate agency Ricacorp Properties. 'Many people looking to upgrade their properties again have had their capital drained by the stock market,' Mr Chow said. 'This may seriously impact the high-end market, in part because many of those homebuyers had upgraded last year.'

Hong Kong's four biggest real estate agencies this month fired a total of more than 300 workers in anticipation of a housing slump, according to a July 23 report in the Hong Kong Economic Times.

Hong Kong's inflation accelerated in June to the fastest pace in four months as food and energy costs climbed. Local lenders including BOC Hong Kong (Holdings) and Hang Seng Bank last month raised their mortgage rates for some customers to deflect the squeeze on lending margins.

'Inflation is giving many people second thoughts about buying properties,' said Alnwick Chan, a Hong Kong-based executive director at property research company Knight Frank LLP. 'There's going to be a correction but it won't be a crash.' Hong Kong has the most expensive luxury home prices in Asia, US$10,490 to US$14,780 per square metre, according to the Global Property Guide website. That compares with US$12,510 to US$22,923 per square metre in Manhattan.

The Hang Seng Properties Index, which tracks the city's six biggest builders by market value, has dropped 30 per cent this year on concerns Hong Kong banks may lift rates.

The expectation that the US Federal Reserve will start raising interest rates in the fourth quarter of this year has damped Asia's stock markets, according to Credit Suisse.

Sino Land sold almost 70 per cent of the apartments it made available at the Palazzo, a high-end complex overlooking the Sha Tin horse track in the first nine days of sales, Sing Tao Daily reported in May. Billionaire Li Ka-shing's Cheung Kong (Holdings), Hong Kong's second-biggest builder by value, met full-year sales targets by June, selling 2,700 apartments for HK$23 billion.

Transactions and prices may rebound in the fourth quarter if both the US and Hong Kong stock markets show they have weathered the sub-prime crisis, Centaline's Mr Chan said.

The property affordability ratio, homeowners' average monthly mortgage payment as a percentage of income, is 32 per cent, 'a very healthy level' compared with 93 per cent at the peak of the 1990s boom, according to Buggle Lau, chief analyst at Midland Holdings Ltd, Hong Kong's biggest publicly traded property agency.

'Growth is definitely slowing, but the fundamentals of the economy are still strong,' Mr Lau said. 'When the uncertainties go away we're pretty sure buyers are going to come back.' Midland's shares have plunged 66 per cent this year, after nearly quadrupling between the beginning of 2007 and January.    - 2008 July 31   BLOOMBERG

US economic woes, rate cuts fuelling HK property boom
Analysts see prices revisiting the heady 1997 peak

Back in vogue:
A Merrill Lynch property analyst has predicted a 50 per cent rally in property prices in the next two years, prompting several Hong Kong employees at the bank to go on an apartment hunting spree

Hong Kong's economy is riding on the coat-tails of China's boom, but its currency peg with the US dollar forces the territory to officially track US interest rate cuts. Local banks have more leeway but have still slashed rates by 100 basis points in the past two weeks as the US federal funds rate has fallen to 3 per cent.

So the housing downturn and mortgage crisis that threatens the US economy has indirectly bolstered Hong Kong property.

Monthly transactions for mass market housing in the final three months of last year were on average 63 per cent higher than in the rest of 2007, hitting their highest level for a decade.

Real Hong Kong mortgage rates are now negative, below inflation of 3.8 per cent and it has become cheaper to buy than rent, analysts say.

A Merrill Lynch property analyst has predicted a 50 per cent rally in property prices in the next two years, prompting several Hong Kong employees at the bank to go on an apartment hunting spree. UBS has the same forecast.

Geoff Lewis, head of investment services at JF Asset Management, said property might 'catch fire'.

The expected boom fed a price rally late last year in Hong Kong's biggest developers, including Sun Hung Kai Properties, Cheung Kong Holdings and Henderson Land Development, but Hong Kong's property sub-index has see-sawed this year.

Several Hong Kong developers are also expected to get an extra kick from their fast growing mainland China businesses.

But many analysts say buying an apartment is better than buying shares, as equity markets will probably stay volatile. Others suggest investors suffering share losses might have less cash to invest in real estate.

New housing supply in the next three years is forecast at half levels seen during the 1990s boom, and interest rates could fall further while inflation heads above 4 per cent, economists say.

With no control over monetary policy and inflation on the rise, a 50 per cent appreciation in flat prices could pose a risk for an economy that saw property prices nosedive 65 per cent when the last property boom burst 10 years ago.

Economists, however, are not worried about an asset price bubble just yet.

They think a strong property market will create wealth, spur consumer spending, and enable the territory to still notch up 4-5 per cent economic growth even if the US economy tips into recession and hits exports from one of the world's busiest ports.

Hong Kong's gross domestic product (GDP) has grown an average 7 per cent annually in the last four years.

'Mass market property prices are still 35-40 per cent below their peak in 1997,' said Nicholas Kwan, Asian head of research at Standard Chartered Bank.

'So even if they rise 30-40 per cent, prices would only be what they were 10 years ago,' he said. 'It's hard to argue that would be a bubble.'

Hong Kong home prices slid after the 1997 Asian economic crisis. Home prices were rocked by the bursting of the dotcom bubble and they slumped in a 2003 outbreak of the Sars respiratory disease, before rebounding about 80 per cent in the last four years.

Clifford Lam at Credit Suisse believes a steady Hong Kong economy could send home prices up 15-20 per cent this year but warns against complacency.

'If the US goes into recession and China's economic growth slows, Hong Kong businesses, including exporters and high rollers in the financial industry, are going to get hit,' he said. 'Some of the home buyers that are jumping into the market on the assumption property prices will rise 40-50 per cent will be disappointed.'

Prices for luxury property, on a four-year roll, have already returned to 1997 levels, with an Indonesian fund paying US$30 million for a house on Hong Kong's iconic mountain, the Peak, last month - an Asian record on a per sq ft basis.

With the pegged Hong Kong dollar's weakening, property has become attractive to foreigners and mainland Chinese.  - 2008 February 5   BUSINESS TIMES


Pent-up supply dampening rents

Record rents are witnessed for some individual apartments, but with an increasing number of flats previously held back for sale are now released into the rental market, the general trend is that rents are seeing downward trend for similar flats. 

For example, a record rent of HK$40psf (versus HK$20psf average rent at The Long Beach, in West Kowloon) has been transacted for an upper-floor unit of HLP's The Long Beach.  Meanwhile, a mid-floor unit in the same project was rented at HK$16.1psf, a record low. More flats of Central Park Towers Phase 1 (by Cheung Kong, in Tin Shui Wai) are also released into the market as the project is being handed over to buyers, and average rents came down from HK$9.5psf to HK$9psf.   A 900sf mid-floor flat has been leased at HK$9,000 or HK$10psf but some similar units were rented out at circa HK$15.3psf in June.    - 2008 August 4   CLSA

Hong Kong property market gets hotter
Properties in HK$50m-HK$100m range particularly popular now

Luxury rents in Hong Kong are soaring to new highs, with monthly payments hitting as much as HK$500,000 (S$97,000), as demand from financial services professionals shows no sign of abating.

Prime residential sites on the Peak and the south side of the island are being leased for up to HK$500,000 a month, with the luxury sector already up around 10 per cent in the first six months of the year.

According to property experts, there is still more room for growth this year as supply remains tight and professionals in the financial services industry with very large budgets continue to flood into the city.

As Ricky Poon, a director at Colliers International, explains, it used to be that the top-priced properties were standalone houses on individual plots.

However, today, houses that are part of a larger complex of properties are able to hit the HK$500,000 range. 'It's lack of supply,' Mr Poon says. 'If you want something very grand and super luxurious - and a house - there's no supply at all.'

Developers have been fast to buy up land on the Peak over the years and they place up to five or six individual houses on the plot, rather than just one mega structure. 'They can call this a single number plot, but it still has five houses on the lot ... but these are still very expensive houses,' adds Mr Poon.

The property firm is forecasting a rise in rents of 10 to 15 per cent this year as a whole. There's also a lot of expatriates coming to Hong Kong, 'so we are seeing a lot more demand', he stresses.

Summer is traditionally the busiest time for luxury leasing in Hong Kong as families move to the city in time for the new school year starting in September.

The issue of school places, however, still remains a thorny one for policy-makers, as international supply is tight and families are forced to put their children on waiting lists.

There have also been reports of million-dollar dividends being paid to secure a place as Hong Kong struggles with its supply of international school places. The options for families are either to enrol their child in a private school, or secure a place at the English Schools Foundation, which is subsidised by the government.

In the past year in particular, as more expatriates come to the city, places have become scant.

Office rents in the city are likewise still on a roll: the iconic International Finance Centre 2, which started leasing at the height of Sars in 2003 at just HK$25-35 per square foot, is now fetching rents of more than HK$100 per square foot.

Luxury sales are still rising, with properties in the HK$50 million to HK$100 million range particularly popular at the moment. 'We're still seeing a lot of buyers out there who like a good location and get these properties for their own use,' Mr Poon explains.

In terms of the mass residential sector, the market is slowly improving but still remains up to 30 per cent off the prices in 1997, when the property sector as a whole last saw its major high.

According to the Land Registry of Hong Kong, property transactions in July were valued at a total of HK$38 billion, up 118.8 per cent from a year earlier but still down 3.4 per cent from June.

The number of transactions was up 67 per cent from a year earlier at 11,121, but down 7.2 per cent on June's figure. Of the 11,121 sale and purchase agreements in July, 9,188 were for residential units - a drop of 4.8 per cent compared with June, but a rise of 70.2 per cent over the past 12 months.   - 2007 August 4     SINGAPORE BUSINESS TIMES

Hong Kong apartments most expensive to rent

Hong Kong's high-end apartments are the world's most expensive to rent, followed by those in Tokyo and New York, reflecting the high living costs in those cities, according to a survey on expatriate accommodations.

An "executive" three-bedroom apartment in Hong Kong costs more than $8,500 a month to rent, said the report, released Tuesday by ECA International, a human resources consultancy in Britain.

Rents for typical expatriate apartments in Hong Kong rose by an average of 10 percent last year and 15 percent in 2005, thanks to the Chinese territory's robust economic growth, said Lee Quane, general manager of ECA International's office in Hong Kong.

In addition, the gap between Hong Kong and other cities was widening, he said.

The survey compared rental prices in 92 locations worldwide, the firm said.

Tokyo rents for expatriates averaged $7,358 a month. In New York, rents averaged $7,249.

Moscow was ranked the fourth-most expensive rental city, at $6,526 a month, followed by Seoul, London, Mumbai and Shanghai, the survey found.

Caracas was ranked ninth because, Quane said, expatriates there need to live in high-security compounds for safety reasons. Paris ranked 10th in the survey.   - ASSOCIATED PRESS    23 May 2007


Mass market housing is a speculator's market
[Real estate as a trading commodity]

Not for the feint at heart and must have deep pockets.  Caveat emptor!

2006:   Year in Review - Hongkong Property

The residential market in 2006 had slower transaction volumes than 2005, but still managed to post some slight pricing gains.  The following summarized by CLSA who has best rated research in the region.

Residential prices rose 1.9%.  Up to 24 December 2006 , the Centa-City Leading Index rose up by 1.9% to 53.94.  From the lows in August 2003 (index level 31.77), the index has risen 70% from the bottom of the market.  However, comparing to the October 1997 peak (Index level 102.93), the index is still 48% below the peak.   

Total sales activity dropped 20%.  The total number of sales activity was around 98,400 transactions in 2006, compared with 123,697 transactions in 2005.  This was 52% below the peak of 205,461 transactions in 1997.   

Primary transactions dropped 20%.  The number of primary sales was down 20% to around 12,000 transactions in 2006, due to the hold back of new launches by developers.  Primary sales were 62% below the peak of 31,398 transactions in 1998.  In 2007, it is estimated that developers will launch about 18,000 units in the market. Still well below long run averages. 

Secondary transactions dropped 21 %.  The number of secondary market transactions in 2006 decreased by 21% to around 69,800 units, compared with 88,337 transactions in 2005.   

Sales activity in non-residential properties decline 18%.  The number of sales activity for non-residential properties (mainly office/retail/car parking space) was around 16,600 transactions, 18% down from 20,289 transactions in 2005.  Comparing with 26,462 transactions in 1997, the sales activity was 37% below the peak. 

Government land sales.  Total land sales by the government amounted to HK$7.06 bn in 2006, down 43% from HK$12.493 bn in 2005. Total GFA of the 5 residential sites sold in 2006 was 1.14mn sf, decreased by 39% compared with 1.87mn sf in 2005. Though the total land sales value has dropped, a new record price was set with the auction of the site at the Peak at a price of HK$42,196/sf.    

Jones Lang Lasalle referred to a demand-supply imbalance in Central where tight availability is not serving the ongoing demand from banking and finance sectors.     Although the Office market started to slow down in October, there was take-up of 152,000 sq ft in November 2006 mainly from banking sector who are expanding their operations.

The market is also affected by the burgeoning hedge fund market which doubled from 58 to 118 over the last two years according to a survey conducted by the Securities and Futures Commission (SFC).   Of the top 20 hedge funds in Hong Kong, ranked by the total value of assets under management, 13 were associated with hedge fund managers from the US, UK and Japan, highlighting Hong Kong's position as the leading hedge fund management centre in Asia.

The Luxury Residential market continues to experience healthy activity.    Recent transactions as evidenced below indicate larger capital values and unit sizes.

  • a house at 3 Coombe Road at The Peak sold for HKD $150 million  ($33,814 per square foot); 
  • a house at 15 Gough Hill Road at The Peak sold for HKd $166 million ($18,444 per sq foot);
  • a house at 13 Big Wave Bay Road in Shek O sold for HKD $380 million.

Property stocks to rebuild steam

Hong Kong property stocks lagged in 2006 but analysts say the sector could regain momentum next year albeit at a slow pace.

Major blue-chip developers such as Cheung Kong (Holdings) (0001), Sun Hung Kai Properties (0016) and Henderson Land Development (0012) recorded respectable increases of 18 to 20 percent in their share prices in 2006 but this paled against the Hang Seng Index, which closed up 34.2 percent at 19,964.72.

Sun Hung Kai Financial strategist Castor Pang Wai-sun said investors looked not at how much a plot of land was worth or how high the selling price per square foot was, but rather, whether developers could sell their projects fast enough.  - by Danny Chung    HONG KONG STANDARD   30 December 2006

HK bank rate rise adds to pressure on property market

Hong Kong banks raised lending rates to their highest level in four years yesterday, putting further pressure on what had been the hottest property market in Asia.

HSBC Holdings plc and its Hong Kong unit Hang Seng Bank, BOC (Hong Kong) Ltd, Standard Chartered and Bank of East Asia Ltd, are raising their prime lending rates by 25 basis points to 6.75 per cent from today. Other smaller banks such as Wing Hang Bank, DBS Bank (Hong Kong), Citic Ka Wah Bank and Fubon Bank (Hong Kong), are also following suit.

Mortgage rates are under 5 per cent, well below prime rates, but they have doubled this year and rises in the past couple of months have punctured a home-buying boom.

However, Vincent Kwan, chief economist at Hang Seng Bank, said property prices seemed to be holding up. 'The cost of home ownership is increasing but the economy is improving and incomes are rising, so I think the property market is unlikely to suffer a significant impact from interest rates at this stage,' he said.

The Hong Kong rate rises follow a quarter-point increase in the US fed funds rate on Tuesday.

Hong Kong tends to track US rate moves because of its currency peg to the US dollar and analysts expect prime lending rates in the territory to reach 7.0 to 7.5 per cent by the end of the year. The banks also raised savings rates by 25 basis points, pushing their top deposit rates up to 1.5 per cent, or slightly higher.

Property is a pillar of the Hong Kong economy and a bellwether of consumer sentiment. Developers are now selling about 50 units a week, a far cry from the 1,000 units snapped up weekly at the beginning of April, when leading developer Sun Hung Kai Properties Ltd launched The Arch, a luxury project where badminton-court-sized apartments sold for US$1 million. Total transactions fell 30 per cent in July to 8,933 from a month earlier and banks are now offering various sweeteners to lure mortgage business.

Property prices are still around half their 1997 peak but they have rebounded in the past two years. They are holding up despite the slowdown in transactions and analysts say more rate rises will cool but not derail the recovery.

JP Morgan analyst Raymond Ngai said this week that rising interest rates would hamper projects launched by developers Cheung Kong (Holdings) Ltd and Henderson Land Development Co Ltd in the next three months. - Reuters    11 August 2005

Hong Kong had a record year in 2004 since the Asian financial crisis. It saw some 125,000 transactions in the private residential market and DTZ expects prices there to continue its ascent in the new year by 30-35 per cent.

The rental market, too, is expected to hold up with new developments like Three Bays offered at a whopping HK$170,000 a month and with good response too.

ResearchWorldwide. com said: 'Hong Kong still has plenty of steam left in its 'catch up' phase. Its strategic location as a user-friendly city into the lucrative and fast-growing Chinese economy is a relatively new demand driver.'

Hong Kong was one of the worst-hit markets during the economic crisis in the late 1990s.  - by Andrea Tan    SINGAPORE BUSINESS TIMES    8 Feb 2005

Hong Kongs sluggish property market may at last be on the rise, but recent record-setting deals have some people worried about a bubble. The luxury-residence sector has led the property rises, topped by a sale in October in which a mainland property-developer paid HK$130m ($16.7m) for a luxury apartment, complete with private pool and terrace. The pricethe equivalent of $28,139 per square foottopped the prices of the property market's 1997 peak. 

Just eight days later, a big Hong Kong property developer, Cheung Kong Holdings (which is owned by Li Ka-shing, a high-profile tycoon), paid HK$9.4 billion for an urban residential site. This was the second-highest price ever for land sold by the government. The site was sold at auction, and was expected to go for around HK$7 billion. ECONOMIST.com   26 Oct 2004

Institutional investors entering the Hong Kong market

International and particularly American institutional players have entered the Hong Kong property market as a toe-hold to entering the fast paced growth of Asia.   Hong Kong provides the stability of Rule of Law from a century of presence by the Brit's since the Opium Wars and a large labour pool that is versed in operating in the West.  

There are 87 investment banks in Hong Kong so no need for 'compradors' who claim they can assist Asians in New York or London.   And besides with now at least one generation of Chinese dynastic wealth who have been educated at Andover, Eton, Harvard, Stanford etc.  families can now count on their own to counsel on investing globally.    

Meanwhile the growing pool of millionaires from the mainland are rushing to Hong Kong to emulate the chi-chi life that Hong Kong has honed over the last two decades.

And blue chip developers in Singapore and Hong Kong are now cooperating for mutual benefit in their respective marketplaces because the competition in China with local players no longer makes them the dominant players.     A most interesting time indeed.  ANDREA ENG is a global real estate strategist in both Asia and the Americas for over two decades

Foreign funds eye mid-tier homes

Foreign funds have always been active players in Hong Kong's property market, but recently they have changed their appetite to hunt for upscale or even mid- tier housing estates rather than traditional luxury units in Island South and The Peak.

South Korean fund Mirae Asset started the ball rolling in mid-October, when it paid HK$1.85 billion for one block of Bel-Air No 8, the last phase of the residential project of Cyberport in Pok Fu Lam, held by Richard Li Tzar-kai's PCCW (0008).

The purchase of 102 apartments works out at about HK$12,500 per square foot, a 16.6 percent discount on the target selling price of developer Pacific Century Premium Development (0432), the property arm of the local telecom giant.

Since then, more foreign funds have joined in the buying frenzy, especially as more new projects are released. Their interest is not confined to flats on Hong Kong Island, but also mid-tier projects in less favorable areas.

A US-based fund bought 42 units of The Long Beach in Tai Kok Tsui from Hang Lung Properties (0101) for HK$400 million, according to media reports. Henderson Land Development (0012), meanwhile, gained HK$500 million by selling 96 units in The Sparkle to the same fund. The Sparkle is located in Cheung Sha Wan, an old industrial district in Kowloon.

Simon Lo Wing-fai, research and consultancy director at property consultant Colliers International, said the institutions' interest in the property market is tied to rental levels.

Quality estates are attractive as overall rents have risen sharply. "Rents have picked up at a higher-than-expected speed," Lo noted. Rising inflation and decreasing mortgage rates translate into low financing cost, which is boosting demand, he said, adding that though the leasing market for luxury units has grown, those stately homes are "simply out of stock."

He said: "Funds are switching to the mass market because the yield is still good."

Property agents said the traditional luxury market is changing as top homes are increasingly being snapped up by the Chinese new rich, who are pushing prices to the limit.

Alibaba.com's (1688) Jack Ma Yun spent HK$300 million for a penthouse duplex in the Mid-Levels. The price tag set a record as the most expensive apartment in Asia.

Hang Lung Properties chairman Ronnie Chan Chi-chung said liquidity has been accumulating in nontraditional economies, such as Middle East, because high oil prices are driving up the trading surplus. "But there are few investment opportunities there so they go elsewhere."

Tony Tse Wai-chuen, general manager for sales at Henderson Land, said institutional investors choose Hong Kong as they are optimistic about Asia. They are worried about buying US homes because of the subprime crisis, while growth in the UK market has been slowing down after years of thriving on foreign investment.

"Funds will commit to real estate in Hong Kong because of its political and economic stability, and it being a gateway to China," Tse said.

The sustained weak trend of the US dollar, and thus, the Hong Kong currency too, is also causing the city's homes to become cheaper. Financial institutions prefer to buy whole blocks. When supply is short, as in today's market, they choose new apartments. Chan said unlike investing in stocks, institutions will not easily pull out when the market turns around. "It's difficult to sell dozens of flats at one go."

Tse said these investors usually do not speculate but hold the investment medium to long term, say for three to five years. He believes the phenomenon will continue as long as fundamentals for the Hong Kong property market remains strong. Henderson is in talks with more than one institution interested in buying the whole of the high-rise City 18 in Jordan, which consists of 94 units mainly of 372 sq ft to 647 sq ft.   - 2007 November 29   THE STANDARD   

Is Hong Kong's role role as a fund-raising hub threatened?

The surge of initial public offerings in Shanghai and Shenzhen last year has caused concern among Hong Kong-based financial services companies that their IPO-related businesses are about to be snapped up by their Chinese counterparts. Adding further to these worries, Pricewaterhouse Coopers (PWC) last week projected that a continued lack of mega IPOs will result in less funds raised in Hong Kong in 2008 than in 2007.

However, PWC believes Hong Kong will maintain its competitiveness as a fund-raising platform for global capital in the next five years. It argues that the equity capital markets in Hong Kong and China are different and that there is little competition between them.

"Different companies have different aims when they go public", says Edmond Chan, a partner in PWC's capital market services group. Some companies want to polish their brands and images, to get access to international capital and to enjoy higher flexibility of money flow. They will choose to list in Hong Kong. Companies that list in the A-share market, which is (largely) restricted to domestic investors and is being operated under an exchange control regime, are primarily focused on raising renminbi funds to finance their expansion in China.

According to reports issued by the accounting firm, ample liquidity and the return of Hong Kong-listed H-share companies to the A-share market resulted in a tripling of the total IPO funds raised on the Shanghai and Shenzhen exchanges last year to Rmb477.1 billion ($65.7 billion). The Rmb438 billion raised on the Shanghai Stock Exchange saw the Chinese bourse top the world in terms of IPO funds raised in 2007, surpassing both the London Stock Exchange and the New York Stock Exchange. Companies going public on the Hong Kong stock exchange raised a combined HK$295 billion ($37.8 billion).

Part of the reason for the sharp increase of IPOs in China is that Beijing has been directing large profitable Chinese companies to list in Shanghai or Shenzhen as a way of raising the profile of the local equity markets. While the regulators have issued no formal guidelines in this respect, it is no secret that several companies that originally sought to go public in Hong Kong changed their plans and went for a domestic listing instead.

Indeed, Vincent Chan, who is head of China research at Credit Suisse, argues that there is now real competition between Hong Kong and China, compared with the situation before 2006 when Hong Kong was the dominant market for Chinese companies wishing to raise equity capital.

"Companies can raise funds either domestically in Shanghai or overseas in Hong Kong and the domestic (China) market will be playing a bigger and bigger role" says Chan. "Right now the A-share market is commanding extremely rich valuations, which I don't think is sustainable, and in the near term, when the market starts to correct, there might be a cooling-down period of A-share listings. But in the longer term, domestic listings will be a trend, and to a certain extent, the Hong Kong market is threatened by that trend.

That said, he notes that Hong Kong maintains its edge as an international fund-raising hub for now.

"Currently the A-share market is mainly attracting domestic funds and H-shares are mainly attracting overseas funds. Gradually the line will be increasingly blurred, but it will take some time"  he says.

One reason for this is that the main way for international investors to buy A-shares today is through the qualified financial institutional investor (QFII) scheme and that is still relatively small in scale. Also, until the renminbi is fully convertible, companies will continue to raise funds in both markets, he adds. 

PWC notes that Hong Kong achieved the highest ever number of new listings in 2002 with 117 companies going public, including 57 on the Growth Enterprise Market (GEM). Despite a significant drop in the number of new listings on the GEM board, the number of new listings remains at 70 or over each year. In 2007, Hong Kong saw 86 new listings even though there were 125 new listings in Shanghai and Shenzhen combined.

"Based on these statistics and the different roles of Hong Kong and mainland China stock exchanges, we can conclude that the A-share market has not affected the Hong Kong market much so far"  says PWC's Chan.

The firm expects the number of new Hong Kong listings to increase to 90 in 2008 from 86 last year, but the total capital raised will shrink by about 5% to HK$280 billion. The IPO activity will be driven by new listings of mid-cap Chinese enterprises with fund-raising targets between HK$1 billion and HK$5 billion. These will typically be privately-owned entrepreneurial firms, rather than the state-owned giants that have dominated the Chinese IPO issuance in the past.

At the same time though, PWC predicts that the Chinese government may allow Hong Kong-listed red-chips to sell shares in the A-share market this year, following the mass return of H-share companies last year. Companies that already have H-shares listed in Hong Kong accounted for 70% of the total IPO funds raised in the A-share market last year, even though funds raised by other mainland companies increased by 68% to Rmb154.9 billion.

"We see this momentum continuing in 2008 although most of the H-share companies have already listed in the A-share market. The market is looking forward to the next cycle led by A-share listings of the red-chips, Frank Lyn, China markets leader of PWC, says in a written statement.

Today, red-chip companies are prevented from listing in the A-share market because they are incorporated outside Mainland China, but the regulators have indicated that they are considering changing the rules to make a domestic listing possible.  If they get a green light to sell A-shares in 2008, the total IPO funds raised in the Shanghai and Shenzhen capital markets are expected to reach Rmb 480 billion, Lyn says. 

Perhaps it is too early to draw the conclusion that Hong Kong is losing its competitive advantage as an international fund raising hub, but it is quite true that its "Golden Age" with mega state-owned Chinese IPOs has already gone.  According to the PWC reports, there were only six new H-share listings on Hong Kong's main board in 2007, compared with 17 in 2006.

"On the international fund-raising side, Hong Kong will definitely maintain the edge for some time, because the domestic A-share market is still quite distant to attract foreign financing. But the overall pie for foreign financing is declining. The period after Sars, between 2003 and 2006, was probably the best period for Hong Kong market development. Competition is definitely rising" , says Vincent Chan at Credit Suisse.   - 2008 February 8   FINANCE ASIA


Hong Kong's Heart
In the shadow of the highrise forest, the capitalist city is blossoming with soul

Mister Softee ice cream truck stands outside the entrance to Hong Kong's brand new Heritage Museum, a tinkly Skater's Waltz wafting from its loudspeaker. It is Saturday afternoon and I have already passed three wedding parties in the Shin Ha neighbourhood, brides springing up like flowers, smiling for the cameras beside the jade-green Shin Mun River.

Four years have passed since the "handover" of Hong Kong to China. Yet, to the visitor, this "borrowed place living on borrowed time"-- as The London Times famously phrased it -- retains its status as the eastern capital of capitalism: A highrise forest where work is holy, suits out-class Savile Row, and scarves are pure pashmina. Only the traffic moves on the left.

Still, beneath the capitalist fervour, Hong Kong is changing. These days it is blossoming with soul; Hong Kong soul. An oxymoron, surely? Not at all.

Take the case of the Heritage Museum. Patient locals have directed me here, to a building so new some bamboo scaffolding still clings to it. Inside, the place is buzzing. Five floors of family-friendly exhibitions offer an animated glimpse into history: life-size re-creations of villages, fishing boats, temples, shops stocked with simple wares. Children surround one computer terminal, playing a game where villagers in the New Territories fiercely resist British troops in 1898. (Revisionist, but true.) In no time we pass into the Great Transformation -- the mid-century highrise boom that left village life a mere memory. Elsewhere, there is art from every dynasty, plus a series of rooms laden with classical Chinese furniture.   Teenagers wearing jeans and sneakers coolly take their ease on formal ebony and mother-of-pearl chairs, as if they have just walked into their own past.

Strolling into Hong Kong's past has become much easier for everyone these days, thanks to the tourism department's Meet the People program. Sunday morning feng shui, anyone? At 9:30 a.m., at the main tourist centre, a master of the 6,000-year-old art of "Wind and Water" sweeps into the room and gets to work. After showing some press clippings from San Francisco, where he has worked for Fidelity Investments and Friends of the Urban Forest, among others, Mr. Cheung declares, "Trees are very good feng shui," adding that "stupid guys in Canada cut all the trees." A natural entertainer, he happily confides that "Life is a drama; I don't care what role I play." An explosion of laughter follows each self-deprecating joke. Showing us feng shui's curio-like compass, he allows that a "boy scout compass will do." An hour passes quickly, and though I try to follow his "easy" lesson about relationships among elements such as fire, metal, wood, earth and water in order to achieve harmony and good energy (chi), I suspect it is more complicated than he lets on.

One nugget of a story lodges firmly in my brain, however. In 1997, the Bank of China commissioned a new building from architect I.M. Pei.  His 70-storey twin towers with a knife edge design point directly at the colonial governor's residence. Menacing and sharp, the design was viewed as an attempt to intimidate Hong Kong through powerful feng shui. A waste of money, is the consensus, since much of the new bank space is vacant. Today, the governor's residence remains unoccupied -- in spite of the weeping willow planted by another feng shui master, to absorb the Bank's "secret arrows." Our little class comes away with new insight into hyper-modern Hong Kong. And I love the three-part wrap-up: "Happy memories are best. Don't complain.  Travelling is just memories."

Shopping is a time-honoured Hong Kong pastime, whether it's jeans, pashminas or antiquities. For me, the phrase "Hong Kong antiques" recalls the day years ago when I was sold serious fakes by a wholesaler on Hollywood Road, the heart of the curios and antiques district. (On the upside, I soon realized I was no businesswoman.) Said dealer shamelessly sent me cheery Christmas cards year after year. So, I am interested in meeting Victor Choi, the proprietor of Dragon Culture, another tourism ambassador, who greets visitors in his shop a few afternoons a week.

An affable gentlemen with two antiques stores, Mr. Choi boasts more than 30 years in the business. At the low end, he sells small items for $50, but most of his merchandise, such as his early Tang dynasty horses and riders, fetch far more. The stuff in the safes downstairs run to a million bucks, he says.

Fakery in Chinese antiques has a long and distinguished history. Blue-and-white Ming glazed pottery (1368-1644), has been faked for over 200 years, allowing for the delightful chance that even your fake purchase is an antique. For the suspicious buyer, says Mr. Choi, there is something new, the Oxford Thermoluminescence Test, a procedure that dates objects within a few hundred years, eliminating the possibility that your Ming, like mine, came from a Taiwan factory line.

However, spirit should rule when making a purchase. "Train yourself to have a sense of beauty," counsels Mr. Choi. "The soul of a piece is difficult to copy." He offers practical tips too: Avoid [neighbouring] Cat Street-- "it's junk" -- and don't enter any shop that calls itself a museum. As I leave Hollywood Road, mildly lusting after a Ming period Kwan Yin, Goddess of Mercy, I remember a Choi maxim: "Spirit cannot be faked." The goddess was both genuine and affordable, but her spirit was silent. I feel I've advanced a rung on the shopping stairway.

My last day begins with a harbourfront Tai Chi class lead by the ageless Pandora Wu, clad in a red jacket embroidered with bright flowers. We are outside, and the morning mist has not yet cleared from a spanking new office tower, still cocooned in green wrappings. Ferries, fishing boats and barges ply the waters. "Face the bus station," translates Elke from Germany, as we perform our best bird-imitations. All over Asia, Tai Chi, done individually or in groups, opens the day by awakening the spirit. Trying to imitate Pandora's slow, strong movements, I hold the world in my hands, a great invisible ball. As the session ends, a cellphone trills. Oops. Chagrined, I talk to a friend from home. Nobody turns a hair. Was this my quintessential new/old Hong Kong moment? Absolutely. Connecting with an old friend during a Victoria Harbour Tai Chi class, bird-wings outstretched to embrace the world.


GETTING THERE I flew Cathay Pacific to Asia. The flight from Toronto stops in Anchorage, but there is no change of plane. The flight home to Toronto is non-stop. Business and first-class travellers can access the lounge in Hong Kong's new airport, with amenities such as hot showers and free Internet service, plus an on-site spa. Call (800) 268-6868, www.cathaypacific.com.

EATING Among thousands of places to eat in Hong Kong, many evoke the city's 'old soul'.

MOST ROMANTIC A drink at The Peninsula Hotel at dusk. Comfy chairs in the vintage lobby, by white pillars topped with gold, while a jazz trio and potted palms speak of a gentler age.

BEST VIEW The Lobby Lounge in The Regent Hotel offers sweeping views of the harbour. Great coffee too.

SHANGHAI CHIC Hong Kong's current fascination with all things Shanghai continues. Can't spice up your Cantonese with a Shanghai accent? The Club Shanghai in The Regent Hotel mimics Old Shanghai with opium pipes, lacy anti-macassars on comfy chairs, cigars and 'aphrodisiacs' in a wall of pharmacy drawers. Hong Kong Old Restaurant (www.hkoldrest.com. hk), at three locations, serves Shanghai delicacies such as smoked egg with candied walnuts, oven-smoked pigeon and bean curd rolls stuffed with woodsy-tasting mushrooms.

HONG KONG TRADITIONAL Moon Garden Tea House, 5 Hoi Ping Road, Causeway Bay, offers a free one-hour introduction to the art of tea. Vincent Li teaches about tea's near-mystical properties in this restful, antiques-filled oasis.

Luk Yu Tea House, 24-26 Stanley Street. The city's oldest teahouse also serves delicious dim sum. You might not get inside if they don't recognize you, but it's worth a try, just to savour what the city was like before the Great Transformation. Named for the god of tea.

Dai Pai Dong, Stanley Plaza, Stanley. In the happening Stanley market area, also home to the oldest Tin Hau (Goddess of the Sea) Temple in Hong Kong, a living reminder of Hong Kong's fishing village roots. Dai Pai Dong offers coffee and tea, plus egg-dipped French Toast with peanut butter.

Happy Garden Noodles & Congee Kitchen, 76 Canton Rd, Kowloon. Friendly spot serving excellent soups, shrimp dumplings, soothing congee. Across from the ferry teminal to the mainland.

BEST HIGH TEA Colonialism is dead, but high tea lives on. The Repulse Bay offers an excellent version: crustless cucumber sandwiches, smoked salmon, wonderful pastries, with a side of history. Canadians and British troops, aided by local Chinese, held out here for three weeks against Japanese invaders. In 1954, William Holden and Jennifer Jones rowed across the romantic bay in Love Is A Many-Splendored Thing. Bonus: the best feng shui in all Hong Kong.

SHOPPING Do not hesitate to ask for shopping tips, the answers alone are worth it: "Behind the Sheraton, in Far East Mansions, next to the Fotomat, up the steps, press buzzer number two." Bargain-seekers take the train or ferry to the mainland city of Shen Zhen, where they snap up the Fendi knock-offs. Caution: you'll need a Chinese visa, and customs line-ups take time.   -   by Nancy Wigston   National Post  19 February 2002




Copyright   2011
By opening this page you accept our
Privacy and Terms & Conditions