Hong Kong property outlook - and Data Base

[drbubb]

HK Property : A second week of falls

> http://www1.centadata.com/cci/cci_e.htm

 

Week : CCLI : CMMI : RobinPl: Tregunt. TaikSh. / ThArch: IslHarb: ParkAv: LagunC : C'ribC :

==== . .

04/05 : 142.36 143.90: 15,526 : 19,927 : 14,997 / 22,910: 12,599 : 13,336 : 09,309 : 07,005 : Possible Peak ??

04/12 : 141.60 143.12: 15,507 : 19,902 : 14,240 / 22,848: 12,623 : 13,614 : 08,805 : 06,941 :

04/19 : 140.04 141.27: 15,497 : 19,890 : 14,228 / 22,737: 12,664 : 13,255 : 08,792 : 06,591 :

======

2wks : -1.63%: -1.83%: -0.19% : -0.19%: -5.13% / -0.76%: +0.52%: -0.61%: -5.55%: - 5.91% :

======

 

The cheaper, older estates are getting hit most - like down 5-6%.

Might that be because that's where the transactions are happening ??

[drbubb]

Good and Bad for BTL

 

Here are some Ratings from the Global Property Guide

 

Location---- : Yield% : Rating--- : L.T. :

Hong Kong-- : 2.82% : Very Poor : 2

Singapore--- : 2.83% : Very Poor : 2

UK, London--: 3.21% : Very Poor : 2

US, New York: 3.91% : Very Poor : 3

Aust., Sydney : 4.39% : Poor ---- : 2

Malaysia, K.L. : 4.57% : Poor ---- : 4

 

(Better)

Japan, Tokyo : 5.02% : Moderate- : 2

Thail,Bangkok : 5.13% : Moderate- : 4

New Z., Auckl.: 6.09% : Mod.toGood: 4

Phil.,M.Manila : 7.51% : Good ---- : 3

Costa Rica, SJ : 8.38% : Excellent- : 3

Panama,PCity : 8.99% : Excellent- : 5

===

> http://www.globalpropertyguide.com/investment-rating

 

Question:

What Locations are most heavily marketed in HK?

There's a connection to the ratings, certainly!

Why do you suppose that is?

(Quick answer: think about the size of commissions)

[drbubb]

Featured Estate : ZENITH (Wanchai, HK Island)

 

 

What's going on here?

 

 

Prices are still below late 2012 levels

 

Compare: CCLI-- : Zenith- : Ratio-- :

12/31/12 : 115.78 : $14,002 : r-120.9 :

04/26/15 : 141.22 : $13,385 : r-94.78 :

>change: +21.97%: - 4.41% : -21.60%

 

Did the sale and completion of the nearby project, The Avenue, have something to do with price stagnation?

 

 

The Avenue was sold at a discount to Zenith, and it added to supply in the area.

It made the area "nicer" in some ways, but also more crowded

[drbubb]

Price Rises in 2015

 

- Bank Valuations have mostly lagged the CCLI index, and its index components

 

Area ==== : -CCLI- : Isl.HbVw: TKO-CHt: TK*TsW : TKT-CPk: TY-TVrd: TC-CrCs: TktLb30 : Tkt.Cosmo : Tkt-IsHV : PrspG*KC

Tower / Fl. : 132.45: 12,721: Tw3-30C: Tw3-25C: Tw3-30C: Tw3-30C: T3-30C : Tw3-30C: TM-325sf : Tw3-30C : Tw3-28C :

Dec- 12/31 : 141.22: 11,083: $8.620M: $6.850M : $12.72M: $9.390M : $4.460M: $7.580M : $3.330M : $10.48M : $7.000M

(2015)

Apr- 04/30 : + 8.77 : +1,638 : $9.150M: $7.710M : $13.57M: $9.620M : $4.690M: $7.640M : $3.490M : $11.05M : $7.320M

Pct. Chg.- : +6.62%: +14.78% : +6.15% : +12.55% : +6.68% : +2.45 % : + 5.16% : + 0.79% : + 4.80 % : + 5.44 % : + 4.57 % :

=========

 

 

Island HarbourView, Tai Kok Tsui

Index chg. : 11,083k : 12,721K : +1,638k : +14.78% (chg. in per sf values - see chart)

Bank Value : $10.48m: $11.05m: +$570k : + 5.44%

[drbubb]

HK Property: Red Hot or Cold as ice?

 

Depends on whether you are looking at New or Secondhand

 

Red-hot primary home deals dampen resales
The contrast between a red-hot primary housing market and an ice-cold secondary one was made all the more obvious during the Labor Day holiday, with both segments refreshing records.

An all-out round of sales at a small-unit development in To Kwa Wan could take the number of new home deals struck over the weekend to more than 200 the most during the May 1 Golden Week since 2008 according to Midland Realty.

But that left sales of existing apartments going in the opposite direction, as those eyeing a home swarmed to grab newer even cheaper options.

All 164 flats at My Place, a redevelopment scheme by the Urban Renewal Authority and China Overseas Land (0688), were sold within three hours yesterday. Prospective buyers earlier cast a total of 5,490 checks to show their intent to purchase the units, representing an oversubscription of 32 times.

The project's urban location and a small lump sum needed to buy a unit appealed massively to starter buyers as well as those seeking rental returns, said Midland's residential chief Sammy Po Siu-ming.

The units between 200 and 300 sellable square feet were priced from HK$3.78 million to HK$7.24 million. The cheapest one after all discounts cost only HK$3.33 million.

Po estimated homeowners could lease the flats for HK$45 pssf, compared to an average HK$40 in the area. Rental yields could reach 3.5 percent, outpacing 2.9 percent for small residential properties. About 40 percent of purchasers were investors, according to the agency

 

===

> http://www.thestandard.com.hk/news_detail.asp?we_cat=11&art_id=156629&sid=44390416&con_type=3&d_str=20150504&fc=1

[drbubb]

Kwun Tong neighbourhood guide - creative haven that's gentrifying

Christopher DeWolf

• 

Start From Zero's furniture workshop in Kwun Tong. Photos: Christopher DeWolf

Kwun Tong's story is not unique. Most cities have an old industrial area where factories and warehouses emerge from obsolescence to become havens for artists, musicians, designers, entrepreneurs and anyone else looking for cheap rent. Kwun Tong is all Hong Kong: a peculiar blend of art and commerce in a landscape of grimy buildings that seem frozen in time.

Although it was a centre of salt production dating back to the late 1200s, Kwun Tong's modern history didn't kick off until the 1950s, when it was developed as Hong Kong's first new town. It soon became the roiling heart of working-class Hong Kong, a bastion of left-wing politics and a centre of manufacturing for everything from textiles to plastics to electrical appliances. In 1979, when the first MTR line opened, it led not to Central but to Kwun Tong.

 

On the waterfront: Kwun Tong's promenade is a great place to relax.

When industrial production was relocated to China in the 1990s, Kwun Tong's empty, highly affordable industrial spaces were colonised by creative types; musicians were especially fond of the area.

. . .

ART OF THE DISTRICT

Kwun Tong's business-friendly makeover has taken its toll on the neighbourhood's cultural scene. While Osage Kwun Tong once boasted the most spacious private art space in the city, the contemporary art gallery has been forced to downsize its former 15,000 sq ft home for more modest digs. But it's still one of the most exciting art destinations in town, with a roster of local artists including Wilson Shieh and Leung Mee-ping.

These days, what remains of the area's creative energy can be seen at the pop-up craft markets and parties in spaces like A Nice Place To … and the rooftop of the Easy-Pack Industrial Building, which is home to designers such as the Cave Workshop. This year saw the debut of Sunday Agenda, a monthly flea market and music festival at Hidden Agenda, a stalwart venue that has survived government raids to become the city's top indie music venue.

==

> more: http://www.scmp.com/magazines/48hrs/article/1794432/kwun-tong-neighbourhood-guide-creative-haven-thats-gentrifying?utm_source=edm&utm_medium=edm&utm_content=20150514&utm_campaign=scmp_today

[drbubb]

Future MTR MAP : http://veenspace.com/2014/01/135/

 

Admiralty Future development

The North South Corridor of the Sha Tin to Central Link project and the South Island Line (East) are under development, completing in 2020 and 2016 respectively. The former will allow commuters from the northeast New Territories direct interchange from the East Rail Line, whereas the latter, terminating at Admiralty, will give residents in the Southern District much quicker access to the CBD. A new underground interchange concourse with natural light will be built to the east of the current concourse, taking up one level, allowing passengers to transfer to the new lines, conveniently. The Sha Tin to Central Link will be one level under the interchange concourse, with the South Island Line being directly below it. Exits E1 and E2 are being rebuilt into one eye-catching exit to accommodate the glass roof of the interchange concourse. There will also be a little rooftop garden in the new Admiralty Station.

> http://en.wikipedia.org/wiki/Admiralty_Station_%28MTR%29

 

Tung Chung Line Future development

The Tung Chung Line was designed to facilitate an extension from Hong Kong Station eastward. According to the Rail Projects Under Planning 2000 released by Hong Kong Highways Department, two new stations, Tamar Station, Exhibition Station and Causeway Bay North Station, will form part of the extension. The line will then connect North Point Station and merge into the Tseung Kwan O Line.

Residents of Yat Tung Estate have appealed to the government to extend the Tung Chung Line to Tung Chung West Station near Yat Tung to ease their transportation problems. Yat Tung currently has 40,000 residents. They claimed that when they moved in 11 years ago, the Housing Bureau's documents indicated a MTR station at the estate. The residents currently have to take a 10-minute bus journey to Tung Chung Station.

^{> http://en.wikipedia.org/wiki/Tung_Chung_Line}

 

Or this:

 

> MTR, Wiki: http://en.wikipedia.org/wiki/Future_projects_of_the_MTR

[drbubb]

MILK CARTONS? - Kowloon's odd Man Wai buildings, a product of regulations

 

 

Rent controls and changing regulations came together to "inspire" the construction of the milk-carton-like

Man Wai buildings in lower Kowloon.

 

These buildings are now in a "prime" location thanks to the construction of the XRL Rail station just 1-2 minutes walk away.

 

How did buildings like this get designed? Today's SCMP (pg.B8) provides the answer.

 

A population boom in HK in the 1950's raised the colony's population from 600,000 to 2.3 million.

And the stresses that came with this, triggered rent controls and changing building regulations. With rent controls in place,

it became difficult to evict tenants, and was almost impossible to redevelop old buildings.

 

In 1955, new building regulations permitted considerably higher structures, raising average building heights from 3.6 stories

to an average of 9.4 stories for buildings constructed from 1960 to 1962. And there was an easing of rent controls, which

had spurred redevelopment, and new constructions proceeded at "a breakneck pace."

 

A plot ratio amendment in 1962 contained an odd loophole, allowing buildings build to older specifications to be built up to

Jan. 1, 1966, and there was a "disastrous building rush" between 1962, and 1965. To gain extra floors, landlords introduced

set-backs allowing them to add as many as 3-7 extra stories. These had to be constructed with "steps" at a 76 degree angle,

to allow light to reach street level.

 

This great building rush led to excess construction, and may have been a cause of bank runs and recession after 1965, and

even of the 1967 riots, speculates Professor Richard Wong, writing in THE VIEW column of today's SCMP.

 

TIMING the Hong Kong Property CYCLE

 

Peaks : 1965 + 16? = 1979 +16? = 1997 + 18 = 2015 (numbers need adjusting)

 

/ source: http://202.72.14.202/cci/charts/ccil.jpg

[drbubb]

MACAU SLUMP SEEN OFFERING BUYING OPPORTUNITIES, Scmp, P-1

 

The reason given for the slump?:

We are "in the middle of the sharpest fall in Macau's economy as gaming revenue sinks..."

 

A small developer run by Philip Pang is said to be ready to invest $1 billion in Macau properties. "It was too expensive to buy anything in the last two year," he said. And he is now expecting Land prices to "return to a realistic level" before long.

 

Macau's numbers are not positive:

+ Macau GDP slid 24.5% in Q1 (compared with a year earlier?)

+ Average home prices for uncompleted flats plunged 17.3 percent, Q-on-Q for the Jan-Mar. period to 121,240 patacas per Sq M. (/ 10.73 = HKD 11,300 psf)

+ The Macau govt rolled out cooling measures in April 2011

[drbubb]

HK Housing cycle seen peaking next year - SCMP, pg. B8

 

Current run began in 2003 and will top out in 2016 amid rate rises, says analyst

 

+ If history is any guide, home prices will peak next year

+ We are approaching the peak, as we enter the 12th year of the surge, says Raymond Ngai, at BofA-Merrill Lynch. BofA expects two rate increases this year, and four next year

+ HK Investment properties generate a 2.7 percent yield, versus mortage rates of 2 percent. If rates rise more than 60 bp, it will effect the investment yields

+ This year, prices could rise by a further 10 percent, before peaking, thanks to low rates, and limited supply

[drbubb]

Now there's some evidence of price cuts... in a confusing market

 

Buyers home in on better deals - says The Standard

 

"Price-sensitive property buyers have managed to wring better deals out of jittery sellers, taking advantage of spillover from swing local and China stock markets"

 

"... for those who see a home as a home, ... could be a boon"

 

Evidence:

+ Renter in Aqua Marine, Cheung Sha Wan, bought a flat there for $7.58mn (is that cheap?)

 

+ Three cases in Caribbean Coast, with the steepest cut being 5.6 percent

 

+ A buyer at Mei Foo Sun Chuen walked away from a deal worth HK$13.6mn, losing HK$700k

(The seller later sold at HK$13.8million.)

 

But "not all sellers are willing to drop prices to woo sellers"

So the market has gone mostly quiet

[drbubb]

HK Property Launches have speeded up, as Supply glut looms, based on SCMP, pg P1

+ Looming supply of 83,000 new flats (a record, over 3-4 years)

+ Sales rush now expected - will it impact on prices?

+ This month alone: 2,000 flats are queued up

+ This is showing govt efforts to increase land supply, are having impact

+ Current backlog is 5,000 and is "still healthy" - when it hits 10-15,000 "alarm bells ring"

+ Housing society flat offerings may also rise, since demand is now very strong

Data elsewhere in the Property section shows that Rents are still rising in HK

[drbubb]

The OTHER Slowdown - this one is in the economy

 

HK business shows further decline - SCMP, pg. A3

 

Purchasing managers' index declines to 48.2 as companies say they are unwilling to spend money and fewer tourists arrive in the city

 

+ Contracted for 5th month in a row

+ July Index down from 49.2 in June

+ Markit says the downward trend may continue

 

A stabilization of China's economy may eventually help

=== ===

 

RETAIL problems too...

 

High-end pain puts pressure on rents - The Standard, pg. 11

 

"Retail rents in prime areas are under renewed pressure as high-end brands feeling the pain of lacklustre consumer sentiment and falling numbers of mainland shoppers seek rent cuts.'

 

Gifts, jewelry, watches, and luxury goods have been the hardest hit

 

+ Louis Vuitton / LMVH says sales are down 10 percent

+ A Tag Heuer shop may be shut

+ Burberry is considering trimming its sales network

+ Gucci is contemplating closing its stores in HK and Macau, if rents stay high

+ Italian fashion brand, Baldinini has left after just four month on a 3 year contract

 

And with all this blood in the streets, Mainland visits are down just 1.8% yr-on-yr.

Meanwhile retail rents are said to be down 20% by Midland

[drbubb]

HK Developers haven't lost their confidence

 

Yuen Long rail site fetches $9.3 bn - The Standard, pg.9

 

+ At that price, SHKP is paying HK$6,276 per buildable sf

+ On top, SHKP plans to splash out HK$20bn to develop the 420,872 sf site.

+ When available, flats are projected to cost HK$15 - 16,000 per sf

+ Sellers of secondhand properties near HK$10,000 psf. may rethink their prices

 

But some think that SHKP is very keen on the commercial floor space of 124,163 sf,

which may generate a greater property.

[drbubb]

2015 data - with some missing weeks...

 

Week : CCLI : CMMI : RobinPl: Tregun : Dynast : Clovell/ IslHarb: ParkAv: Waterf : Sorrent : ThArch : C'ribC : TaikSh.

Numb.: ( #1) ( #2,4): (---- #6) : (--- #7) : (--- #8) : (-- #9) / (--- #7) (--- #8): (- #12) : (-- #13): (-#14) (--#-3) : (---#21)

==== . .

08/02: 146.07 147.91: 15,671 : 20,181 : 26,709 : 23,085 /13,474: 13,569 : 15,647 : 17,583 : 21,209 : 7,022 : 15,186 :

07/26:

07/19:

07/12: 142.61 144.57: 15,591 : 19,942 : 26,391 : 22,811 /13,022: 13,344 : 15,651 : 17,464 : 21,067 : 7,073 : 14,183 :

06/07: 143.31 144.54: 15,493 : 20,014 : 25,251 : 22,894 /12,820: 12,965 : 16,454 : 17,515 : 22,361 : 6,500 : 14,315 :

05/31:

05/24:

05/17:

05/10: 141.37 142.68: 16,540 : 19,897 : 24,380 : 22,761 /12,969: 12,893 : 16,610 : 17,121 : 22,153 : 6,155 : 13,883 :

05/03: 141.46 143.28: 16,452 : 19,792 : 24,251 : 22,640 /12,845: 13,366 : 16,569 : 16,679 : 25,687 : 6,975 : 14,409 :

04/26: 141.22 140.98: 15,525 : 19,924 : 24,413 : 22,792 /12,721: 13,315 : 16,558 : 16,625 : 22,813 : 6,260 : 14,347 :

04/19: 140.04 141.27: 15,497 : 19,890 : 24,370 : 22,752 /12,664: 13,255 : 16,503 : 16,608 : 22,737 : 6,591 : 14,228 :

04/12: 141.60 143.12: 15,507 : 19,902 : 24,386 : 22,766 /12,623: 13,614 : 16,591 : 16,697 : 22,848 : 6,941 : 14,240 :
04/05: 142.36 143.90: 15,526 : 19,927 : 24,416 : 22,794 /12,599: 13,336 : 15,210 : 16,742 : 22,910 : 7,005 : 14,997 :
03/29: 139.70 140.95: 15,432 : 19,807 : 24,269 : 22,657 /12,651: 12,994 : 14,335 : 16,578 : 22,658 : 6,984 : 13,906 :
03/22: 140.05 141.81: 15,403 : 19,768 : 24,222 : 22,613 /12,622: 12,950 : 14,298 : 16,535 : 22,626 : 7,012 : 14,485 :
03/15: 139.03 140.70: 15,381 : 19,740 : 24,187 : 22,581 /12,624: 12,951 : 14,280 : 16,514 : 22,598 : 7,008 : 13,363 :

03/08: 138.80 140.46: 15,315 : 19,656 : 24,084 : 22,485 /12,689: 13,019 : 14,298 : 16,535 : 22,627 : 6,965 : 13,663 :
03/01: 137.12 138.67: 15,638 : 19,619 : 24,039 : 22,442 /12,437: 12,761 : 14,187 : 16,406 : 22,450 : 6,883 : 13,630 :
02/22: 136.20 137.34: 15,679 : 19,670 : 24.101 : 22,500 /12,641: 11,792 : 14,180 : 16,398 : 22,439 : 6,573 : 13,319 :

02/15: 137.20 138.52: 15,672 : 19,661 : 24,091 : 22,491 /12,640: 11,791 : 14,193 : 16,412 : 22,459 : 6,570 : 13,932 :

02/08: 136.64 137.46: 15,719 : 19,719 : 24,161 : 22,557 /11,447: 12,821 : 14,244 : 16,473 : 22,541 : 6,255 : 13,515 :

02/01: 136.35 138.01: 15,557 : 19,517 : 23,914 : 22,325 /11,533: 12,649 : 14,197 : 16,146 : 23,227 : 6,692 : 13,945 :

01/25: 134.03 135.01: 15,587 : 19,554 : 24,903 : 22,368 /11,378: 12,466 : 13,970 : 17,147 : 21,797 : 6,538 : 12,627 :

01/18: 134.64 135.73: 15,608 : 19,581 : 24,936 : 22,398 /11,366: 12,311 : 13,997 : 17,179 : 21,838 : 6,079 : 13,586 :

01/11: 133.64 135.35: 15,570 : 19,532 : 24,875 : 22,343 /11,333: 12,465 : 14,030 : 17,331 : 21,891 : 6,145 : 12,554

01/03: 133.34 134.43: 15,556 : 19,515 : 24,853 : 22,323 /11,234: 12,546 : 13,953 : 15,674 : 21,770 : 6,538 : 12,883 :

st.2015

12/28: 132.45 133.50: 15,491 : 19,434 : 24,750 : 22,230 /11,083: 12,582 : 13,947 : 15,883 : 21,760 : 6,141 : 13,301 :

[drbubb]

Hong Kong: Where the temperature hit a new high, and the Property market too

 

Yesterday's high temperature was the highest on record : 37.8 degrees, centigrade

The Top 10 temperatures since 1885

#

1 : 37.8 - 08/08/2015 / #6 : 35.5 - 08/31/1962

2 : 36.1 - 08/18/1990 / #7 : 35.4 - 08/22/1960

3 : 36.1 - 08/19/1990 / #8 : 35.4 - 07/19/2005

4 : 35.7 - 07/25/1968 / #9 : 35.3 - 08/03/2007

5 : 35.6 - 06/01/1963 / 10 : 35.2 - 05/26/1976

 

PROPERTY Prices in HK hit a new high too

 

Here's the Centaline Index, since its inception : CCLI, Last: 146.01

Here are three Estates the market "forgot"

1. Robinson Place : $15,671 psf

2. Sorrento, Kowloon Place : $17,583 psf

3. The Zenith, Wanchai : $13,983 psf

 

And two estates the market loves

4. Taikoo Shing : $15,186 psf

5. Fanling Centre : $ 7,672 psf

[drbubb]

RULE Change could bring life to old factories - C1

'Industrial use" could be redefined to cover aquaculture and hydroponics

 

+ There are 1,448 privately owned bldgs, of 27.85 mn sqm

+ Only 7.8% is devoted to actual manufacturing; 41.8% is storage, 24% office

+ About 5% is other: shops, showrooms, data centers + new fields

+ aquaculture and hydroponics showed up for the first time

May formally allow new uses after more study, including artist studios, but not sales

 

there were cautions against shops and commercial offices -

If used as an office, there is meant to be a tie-in with storage or other acceptable use

[drbubb]

Week : CCLI : CMMI : RobinPl / ParkAv: Sorrent : C'ribC : TaikSh.
==== . .
08/09: 144.29 146.25: 15,545 /13,556 : 19,024 : 7,247 : 14,268 :
08/02: 146.07 147.91: 15,671 /13,569 : 17,583 : 7,022 : 15,186 :
chg. -1.22%: -1.12%: -0.80%: -0.10% : +8.20% : +3.20% : -6.05%
======
Those are big drops.
But I am not sure what's happening with Sorrento. A one-off gain maybe?
That rise was overwhelmed by the drop in estates lik Taikoo Shing

[drbubb]

Jittery homebuyers forfeit deposits - The Standard, pg. 4

 

Bearish stock sentiment has spilled over to the property market, as some home purchasers are forfeiting deposits and walking away from their deals.

 

+ Four buyers did that at Henderson Land's Parker 33 in Sai Wan Ho, launched 10 days ago

+ In the secondary market, a flat at benchmark Taikoo Shing estate, changed hands 24% lower than a similar unit sold a week ago.

: The seller cut his price by $550k, and sold his 1,015 sf unit at HK$17.65mn, vs. an estate high record of HK$23.3mn, at HK$22,956 pssf

+ At Tsuen Tak Gdns in Tsuen Wan, a 341sf flat sold for $3.05mn, or $6,616 pssf - 17% less than the market price in the area

 

(reaction):

Greene King

I would guess most who would buy in HK and had exposure to the China markets would already have exited (leaving those poor guys who got suckered in at the end of the boom) so do they need someplace to park their cash? Unless there is a real bet against the HK$ assets in property here would probably be less exposed to currency fluctuations that most of the Asia Pacific region. Not sure about those exposed to HK shares in a big way and how they may feel. One thing however is the Fed is unlikely to raise interest rates for now (not until the election is over next year?) so payments should remain low.
So where does that lead us? 10% reduction in HK property over the next few months once the panic from the last few days has died down a bit?

RESPONSE

"So where does that lead us?
10% reduction in HK property over the next few months once the panic from the last few days has died down a bit?"

Once the HK property market rolls over, we will get more than that.IMO.
I have said some time ago, that I expected a Long Cycle market peak in 2015-2017. And ideally, it would be 2016, probably the Spring (April?).

After that peak, I expect a slide of 3-5 years, maybe into 2020. And over that time frame, I would expect prices to lose at least 30%, and perhaps more. That's what my cycle work suggests...

The usual pattern would have stocks peak 6-12 months before property prices. And I now see a likely stock peak in April. If that was the high, then August is only four months after that, so it would be a bit "early" for the cycle high, based on the patterns I have seen in the past. But we cannot rule it out.

It was might strong intention not to miss this cycle high, so I was willing to sell early. Thus, my property sale completes next month, in September

[drbubb]

The Beginning of the End?

Developers raise perks for buyers

 

Property firms offer bigger discounts and low down payments as stock market turmoil and global uncertainty depress prices.

 

+ HK developers are sacrificing profit margins, to offer bigger discounts, and financing

+ "Some say the market is approaching a turning point after a seven-year rally" and a 150% rise

+ Aspen Crest is offering 30% second mortgages

+ The sweeteners are cutting into interest in the secondhand market

+ Some who were selling, are now putting flats to rent instead

+ About 1,000 (10,000?) new flats are going to come on the market, leaving secondhand cold

+ Two developments comprising 2,000 units will hit the market this week

+ Henderson has raised the commissions it will pay from 3% to 4%

 

Alfred Lau of Bocom says: "We may see a turning point in the last quarter of this year."

[drbubb]

NO PLACE to Hide ?

 

/ 1 /

"The pause before the Drop" ?

 

HK Property Sales plunge to 17-month low - SCMP, Headline story

 

Transaction volume drops 29.2 per cent as buyers stay on the sidelines amid volatility and uncertainty

 

"Volume in August hit the lowest level in 1 1/2 years... as investors opted for the sidelines"

Just 5,197 property sales transactions were done, with 3,896 (down 37.3%) in the residential market.

Developers are said to be "grappling with the problem of poor investor appetite",

and this is coming at a time when flats for sale is set to increase sharply in the months to come.

(Henderson Land has just increased its "discount" from 10% to 20% in a new launch, High Park Grand.)

 

There's a several week's lag in data collection, so these figures reflect the market situation in from July

into early August.

 

 

/ 2 /

Neowave: "S&P will drop approx. 50% during the Next 4 years!"

 

This comes from a special report about the technical situation of US stocks that I received by email.

They believe that a "fifth wave extension" completed recently, and they expect the S&P500 to fall from

its HofYr (2,134.72) to, first, the low near 1650 (-23%) reached in Fall 2013...

 

... and after that: much lower: 50% of 2,134.72 = SPX-1,067

 

=== ===

Are investors headed ... into a Black Hole?:

http://www.greenenergyinvestors.com/index.php?showtopic=20286

[drbubb]

High end stuff is not selling well

Some desperate sellers are getting VERY aggressive now. As The Standard reported:

Homeowners slashing prices to unload flats:

+ Centre Stage, Sheung Wan:
Price was cut from HK$63mn to HK$45mn, where the (swiss) seller suffered a small loss after transaction costs. The final deal was HK$24,000 pssf, but was valued by lenders at $67mn, or HK$35,000. (Some lenders are going to be in a panic after this sale - what's happened to their collateral margin??)

But agents say that the bank valuation was way too high, and there are projects like The Nova and Upton in the HK$20,000 - 30,000 pssf range.

+ Metro Town, TKO:
2-BR unit was sold at the lowest price seen for similar units over the last six months, as the seller cut HK$150k to sell below $6 Million

Sellers also suffered losses at The Java (lost HK$745k), and Tuen Mun Trend Plaza (lost around HK$200k)

[drbubb]

MOST POPULAR stories / SCMP : South China Morning Post

1. Hong Kong home prices could begin falling next year, says JP Morgan
2. Warning bell for the end of Hong Kong's 12-year property rally is ringing louder

10 SEP 2015

More young Hongkongers commit suicide over unaffordable housing and lack of social mobility

=== ===

EXCERPTS

Hong Kong home prices could fall by 5 per cent to 10 per cent over the next three years, according to JP Morgan, which warned of the risks of an economic slowdown in the city.

A slowdown marked by falling retail sales and a softening mainland economy would adversely affect home purchasing power and buying desire, said Cusson Leung, head of conglomerates and property research at JP Morgan.

Leung told a press briefing on Friday there were a number of factors that could affect the performance of Hong Kong property market, such as credit leverage and capital flow, while adding that he did not see any immediate risk of over-leveraging of real estate or capital outflow.

The unemployment rate is expected to rise

CUSSON LEUNG, JP MORGAN

However, he raised concerns over a potential slowdown of the city’s economy, linked to the risk of further decline in the mainland China economy.

“Retail sales are declining and international brands are talking about network consolidation in Hong Kong,” he said. "The unemployment rate is expected to rise.”

Leung said the impact of the negative factors would become more obvious early next year. “2016 will be a more difficult year when compared with 2015. Home prices could see a decline,” he said.

A woman pushes her child past a property agency's window in Hong Kong. Photo: AFP

While saying that JP Morgan had not yet reached a house view on the degree of home price falls, he said it was possible prices could drop by 5 per cent to 10 per cent a year over the next three years, starting from next year.

Hong Kong home prices rose 13.5 per cent last year and 8 per cent in the first half of this year, according to the data from the Rating and Valuation Department.

Leung said home prices were unlikely to see a sharp plunge of 30 per cent in a year unless a crisis or really bad unexpected news hit the market.

. . .

 

Experts expect up to 10pc drop in home prices as global uncertainties and stock market rout dampen sentiment, ending a 12-year price surge

. . .

The warning bell signalling the end of Hong Kong's 12-year property rally is ringing louder with more experts predicting that the stock market rout and economic uncertainties at home and abroad will accelerate a price correction.

 

Analysts widely expect home prices could fall as much as 10 per cent this year. Hong Kong home prices have risen 9.8 per cent since January after soaring more than 360 per cent from 2003.

[drbubb]

With the HK property market now peaking out (maybe), it is interesting to review where gains were the best

We can now see...

We have seen some pretty terrific gains,

for "cheap" properties near MTR stations - since the Lows in 2003 and 2009

 

- in places like Fanling Centre - which are right next to MTR stops,

though far away from Central

 

Fanling Centre Per SF, gross : $7,727.32 Per SF, net : $9,932.14 1.10 %

 

Both rents and property prices have shown big gains:

 

The big rally from about $1500 (2003) to $8000 (2015): + 433% must be one of the biggest in Hong Kong.

 

An MTR link is coming from Shatin to Central, which will serve to reduce substantially the travel time to Central.

 

For HK as a whole, we have seen a gain in CCLI from 32.16 (2003) to 146.76 (2015) - that's +356%

Some years ago, property agents with major firms, like Anne Marie Sage were telling their clients to stick to prime properties in prime locations, while I was telling people to think about buying cheaper properties with good transport links. We can now see clearly who was right.

[drbubb]

The PEG is under attack again ... 12-mos

 

"Hong Kong had $339.9 billion of foreign-exchange reserves at the end of July, the eighth-largest stockpile in the world"

 

 

Hong Kong Monetary Authority forced to act twice to defend currency ...

South China Morning Post (subscription)-1 Sep 2015

Investors switching out of the yuan since its devaluation last month have pushed up the Hong Kong dollar, which hit the high end of its peg to ...

Hong Kong Buys $800 Million to Keep the City's Currency Pegged
Bloomberg-1 Sep 2015

Based on the chart (above) the defense of the Peg (ie selling HKD) must be continuing.

And this chart too:

(in edit - I found these stories):

1.

Hong Kong Buys $2 Billion to Keep the City's Currency Pegged

HKMA intervenes for first time since April to defend peg - Aug. 31st

2.

HKMA sells HK$4.26 bln to keep Hong Kong dollar in trading band

Reuters-22 Sep 2015

The Hong Kong Monetary Authority (HKMA) stepped into the currency market and sold HK$4.26 billion (US $550 million) in Hong Kong dollars on Tuesday as the local currency hit the strong end of its trading range.

The Hong Kong dollar is pegged at 7.8 to the U.S. dollar, but can trade between 7.75 and 7.85. Under the currency peg, the HKMA is obliged to ...

3.

HK should devalue the currency peg

South China Morning Post (subscription)-20 Sep 2015

The same belief is true for the commitment to the Hong Kong dollar's peg to the US dollar. Hong Kong's current monetary system is the root ...

. . .

The Hong Kong Monetary Authority is caught in its own intellectual cul-de-sac: that the peg must be maintained at all costs from the viewpoint of a stable Hong Kong dollar.

That is a gross mistake. The problem is that they are failing to see the peg's problem is the US dollar, which has become a debased currency. It is dragging down more than Hong Kong's monetary policy - it threatens its society and economy. Yet it is defended by bureaucrats with a fervour and sense of mission displayed by worshippers of Stonehenge.

. . .

Quantitative easing, as part of an activist Fed policy, has proven to be ineffective. It has pushed global financial markets and Hong Kong's property sector to an edge where a controlled retreat is unlikely. HKMA chief executive Norman Chan Tak-lam recently said: "In terms of Hong Kong's property market, the disconnect between the purchasing power of our citizens and the high valuation has become very serious for quite some time."

. . .

The HKMA holds US$340 billion in foreign reserves and a 400 billion yuan (HK$486 billion) swap line with the People's Bank of China to defend against speculators. Hong Kong people would benefit more from a surprise devaluation rather than a wasteful and hopeless defence of the peg.

 

("US Dollar has become a debased currency"?? "Surprise DEVALUATION???"

The problem is that the HKD is too popular in global markets - How does the HKMA fight THAT pressure?)