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Hong Kong Exiles Property Thread: tinyurl.com/AX-Exiles

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Hong Kong Property Peak - the AX-Exiles thread


(I have decided to give AX a rest for a week -

I got fed up with moderator Ed's disruptions - so I will post here for a bit and invite others to join)


It has actually been an interesting week, with the Centaline Index reporting a big drop, about -2%:


(OTP's posts on AX):


BIG DROP this week !
[Centa-City Leading Index]
127.5 - 2.15 %
> http://www1.centadata.com/cci/cci_e.htm


"That puts property at a 18th month low since september 2014. Also since the peak of 146.92 property is down 13.3% in 26 week so far it has been averaging a weekly fall of 0.5% "

That sounds right.
In the second half of 2008, the falls averaged about 1% a week, and this drop has been slower.

But with the 2% of this last week, maybe the slide will be picking up pace.

Last week, the Caribbean Coast index dropped from : 6,559 to 5,836, that's -11% in just one week.
I count 26 weeks from the 9/13/15 high in CCLI, and 28 weeks from the 8/30/15 high in Caribbean Coast
> see: Historical Data base : http://www.greenenergyinvestors.com/index.php?showtopic=13789&page=1
So the drop in Caribbean Coast has averaged 0.82% a week.

Meantime, the bellwether Taikoo Shing is down from 15,181 (10/04/15) to 12,472 (3/13/16), that's -17.85%, or 0.78% a week.
Those are big drops, almost on par with the -1% per week slide that we saw in 2008.


So the HK market looks weak as we head into the spring, with no sign of the usual post-CNY buying demand.




I am giving AX a rest for a week or so, for reasons you may know.

See New Thread : http://tinyurl.com/AX-Exiles

+ + + + +

If you are not yet a member, you can join by following the instructions in post#2

Here: http://www.greenenergyinvestors.com/index.php?showtopic=19143

(Clue hint that you will need: "Admiral B*rd" (insert "y", instead of "i")



Quoted: DC, KS, GK, L1, H. (v - 24)

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Kerfluffel on the Philadelphia thread




(In case people did not see it here are some posts from the AX thread on Philadelphia):


Duracelll (1 day ago)

Yes Ed, please. You don't need to troll every single thread. Why don't you start a new forum on "Geopolitical issues" and post your copy-pasted the-world-is-coming-to-an-end and links to stupid zerohedge there?

OffThePeak (1 day ago)

Here you go, Ed.

I opened a new thread -- and we can carry on the General (non-Philly) part of the discussion there:
Let's do that !
Ed (19 hrs ago)

I fail to see how these posts dilute the thread.
Surely if you are investing money into a country --- and the macro indicators are flashing recession.... you'd want to know that?...



OffThePeak (8 hrs ago)

"I fail to see how these posts dilute the thread."
TRY READING THE TOPIC TITLE and my posts here, They are very specifically about Philadelphia....


OffThePeak (6 hrs ago)

You want to ruin this thread - go ahead.
I have received PM's from people complaining about how you are trolling threads here, and I defended you. I wont do that anymore


(Ed continued to make very general posts... and that drove me to post this):


OffThePeak (6 hrs ago)
"Perhaps the Philadelphia job market is buoyant?
If I were investing there I'd most certainly want to understand the situation rather than just jumping in blindly."
Excuse me Ed, but you are Full of it.
This thread is loaded with rich detail, making logical arguments. How can you possibly accuse me of investing blindly!
You are the one who seems blind to every scrap of fact and specific detail.
This will be my last post this week. Maybe I will return next Saturday, Maybe not.
(After Ed defended himself, this post came):
kingsidney (4 hrs ago)
All of Ed's posts just continue to point to the fact that he just isn't very smart and/or well-educated.

1. I recall he said before that he was going to rename the Finance thread to "Property and Finance" thread because "they are the same thing." Those of us that understand Property AND Finance know how naive that statement is...
2. Property markets are MICRO. You cannot talk about America's property market in such general terms as the supply-demand dynamics that drive good property investment are inherently micro and differ from state to state, city to city, and even district to district...
3. I fail to see any original thought coming from you. Everything that you post is a re-posting of something you read on zerohedge or wolfstreet. Get some original thinking man!

Unfortunately Ed, all of the above goes to completely discredit you as a real "Editor", that which you are aspiring so hard to be. As I have said before: stick to running this site, making a buck, but stop trying to "educate" us. We are all smart individuals (more so than you) with the ability to seek out broad and diverse opinions to inform our investment and life choices. We don't need you to "show us the light".
=== unquote ===
I do plan to post again on AX, but I want to stop for a bit, and let Ed think about how he might be ruining his own Forum.
I think he means well, but he really needs to learn to be more sensitive to the requests of the posters on AX.
Maybe a fall-off in my own active postings at this critical time will help encourage him to change his own posting style.
And it won't hurt for some of AX's regular posters to know there is an alternative place to post, and read comments about property opportunities here on this new GEI thread.
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EXCELLENT recent posts by AX people - #1


"Down by 50 pct by end 2017"


Greene King (24 hrs ago)

What is interesting is that we are still seeing falls in prices yet the economy has largely not changed in the last month or two, if anything shares have risen. If however the economy does dive particularly if unemployment starts to rise then I foresee a deep fall even if the government removes cooling measures.

Lucane01 (20 hrs ago)

"the question is where would be the bottom for this cycle, and when will we reach there..
my worst case is 100 and end of this year.. dont see index dropping below 100.. the govt will panick at those levels and start loosening policies .."
Put me down for 50 by end of 2017.

"What is interesting is that we are still seeing falls in prices yet the economy has largely not changed in the last month or two, if anything shares have risen."
Shares = economy?
Property is a function of the credit cycle and the cycle flipped from leveraging to deleveraging sometime in 2014. Different industries in different parts of the world had their credit cycles peak at different times, but the state today is that the global credit cycle is grinding down.

As with all things its escalator up and elevator down - never sure why people are still surprised when things implode seemingly out of "no where" - it happens periodically... perhaps there is a reason.... such as the credit cycle ><

Greene King (19 hrs ago)

Where I am coming from is that prices continue to fall yet the economy is little changed of late. So if the economy has changed very little why do prices continue to fall? Shares are important as a sharp drop does impact peoples perceptions of the economy just as a fall or rise in unemployment does. Shares though are about their highest for 2016, unemployment has not increased and in Shenzhen property prices are shooting up which should boost sentiment...

Lucane01 (4 hrs ago)
I disagree that the economy is little changed, I think it is quite lousy now. China is finally globally recognized as being a disaster that many China-watchers have been warning of since 2011. Factory closures for years and years, falling property in all but tier1 cities, bankruptcies, etc. What happens in China has a magnified effect in HK.

Furthermore the retail closures without new tenants moving in are all across HKI and Kowloon. People used to line up for properties and things sold out in minutes, now the Visionary is still not sold out after a year.

The economy is markedly worse over the past few years. Do not think that actions in one place have an immediate reaction in other places - it takes time for these things to manifest and propagate throughout industries and markets. So is there a big difference in the economy between January and March? No, but there is a big difference between 2011 and 2016, and all signs show that it will get much worse.

As for SZ property prices, I think it'll be proven wrong to think of it as anything more than just tricks and gambling of a small number of actors. I've heard stories that HK bosses sell their SZ properties to maids who borrow 100% to "buy" it. They do this because they want to get capital out of the country ASAP and the property market is too illiquid to sell into, so they have to create fake sales to related parties and scam the banks with over priced contracts to get high mortgage valuations. This is why when the RMB did its surprise devaluation SZ property prices began shooting through the roof. This is all not a sign of strength or confidence in China but rather of panic and collapse.
. . .
The only way to make the price go higher is to borrow money which is thus new money. Have someone borrow new money to make the price go higher, but that person needs to remember that they owe it back to the bank - so they will need to sell that bear to someone else at a price high enough to pay back the loan. Eventually after enough borrowing has occurred the price will get so stupidly high that one person will refuse to borrow more (out of fear) and thus the price can go no higher...
. . .
Anyhoooo, as I see it the signs of HKers being over extended in terms of leverage are manifold. There are banks everywhere, credit shops all over, phone calls and text messages offering loans with no collateral or anything...
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EXCELLENT recent posts by AX people - #2


"Sold at a LOSS", etc


Greene King (4 hrs ago)

I agree the China economy is not doing to well at the moment however this was apparent back when the HK property market peaked. Foreclosures have not really risen and neither has unemployment and most HK property buyers have low loans in relation to purchase price. So if falling secondary prices are not caused by the need to sell or the impact of low primary prices on secondary markets then is it purely sentiment and expectations of a hard time ahead? In such a case if/when we reach a stage of foreclosures and higher unemployment prices could plummet. I have not been following new land sales closely however I understand some sales have been 20-30% or more below peak which does indicate how developers feel.
Incidentally as I have been predicting that the government will remove some special cooling measures when the CCI hits 120 could we reach this situation as early as the beginning of June?
Hath (3 hrs ago)
Okay so ive noticed something interesting on centadata from the small number of buildings i regularly take a look at Ive seen for example a flat in sorrento sold within the ssd period and sold at a loss and numerous flts sold around with losses now, again sorrento is just an example ive noticed quite a few overall across different buildings.im sure theres more aswell in other conplexes I dont take a look at
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The way that HK Property prices have raced ahead of inflation is worrying, even scary


Latest Ratios : Timing: PropIdx: Prices: Ratio : (2004 was 1.00 )
Hong Kong---- : '15-q2 : 345.03 : 137.87 : 250.3% !!
Singapore----- : '15-q2 : 175.50 : 130.09 : 134.9%
Malaysia------- : '15-q2 : 180.24 : 131.06 : 137.5%
Philippines---- : '15-q2 : 217.30 : 159.84 : 135.9%
Thailand------- : '15-q2 : 105.43 : 134.50 : 78.39%
Indonesia------ : '15-q2 : 138.51 : 164.89 : 84.00%


> From the 18-year cycle thread


Property Prices versus Inflation


In many countries, Property prices have way-outpaced price inflation,

and the "system is broken" (as one website described it), thanks to ultra-low interest rates


Hong Kong:











"Hong Kong real estate prices have leaped by 234.46% in a little over 10 years to reach a staggering 345.03 as of the second quarter of 2015 from a base of 100 since year-end 2004. General inflation levels have just climbed 37.87% during this same period. In other words, Hong Kong home prices have outpaced inflation by an astounding 207.16% during this period, the highest rate of appreciation in the countries covered in this post."


> source: http://systemisbroken.blogspot.hk/2016/01/singapore-malaysia-and-thailand-post.html


Mr Li Ka-shing's warning this week may have helped to stall buying. He said:

"The economy is at its worst in 20 years."


And the buyers and CK's latest development, Spectra in Yuen Long are balking - that's the potential buyers, I mean.

Only 80-130 of the 338 flats released for sale this week wound up being sold. And that is AFTER discounts of up to 20% delivered through tax rebates, shopping coupons, and financing options. But maybe HK$10,000 - 14,000 is just too high for the Yuen Long location. Some brokers had expected it to sell well, because it is closer to the MTR than prior (soldout) releases like Yucci Square. But they had been sold prior to the latest dip in the market.

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Looking for a Global property bargain?


This chart suggests that :

+ Hong Kong is not the place to look, and

+ Maybe the US should be on your list - but not all American cities* probably




*Here's why I say: Not All American cities - a few major cities, like NYC are not bargains:


Note: HK: US$ 3,290 x 7.77 = HKD $ 25,563 psf / 10.73 = HKD$2,382 psm


Can NYC (SF & Boston?) sustain their "global trophy" status (in a financial meltdown) ?


If we can sidestep or delay a 2nd more-serious Global Financial Crisis,

then Timing-wise, the US may be in a more favorable moment of the 18 year property cycle

than, say, Hong Kong is:


A strategy that has seemed to work again-and-again has been to sell at the Peak of one market, and buy after the Low in the other. This strategy would have you SELL HONG KONG, and BUY IN THE US - but not in the over-valued financial capitals, which seem to all be locked into a simultaneous bubble - look how overvalued HK, London, and NYC are, all at once

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Keiser Report: Global Housing Bubbles (Episode 883)


Published on Mar 3, 2016


Greetings to Ross Ashcroft, whom I met several times (he was close to Fred Harrison, interviewed him many times)

Here's the excellent documentary from Ross and his team - with over 4.25 million Views on Youtube!


Four Horsemen - Feature Documentary - Official Version


(narrated by a renown financial writer & GEI poster, Dominic Frisby)

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Steve Keen, the Australian "anti-economist", explains his more holistic approach to forecasting.


It worked - he called the 2008 Crisis, and the Chinese debt crisis


Meet the Renegades Steve Keen


Will mainstream Economists admit the failings of their theories?
"I don't think they will do that. They are too-wedded to their classical point of view" (paraphrasing him)

"They won't admit that Capitalism is inherently instable."


"The baby boomer were one of the most privileged generations in history. They entered the work force when everything was right; when there were low debt levels, and employment was expanding. Property prices were no more that 3X income, and now they are more like 11X."

Ross: "The debt trap will force people to rethink economics"

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Phillippines Example : Useful Detail for those thinking of Renting or Buying in Makati


One of the key factors to consider when Renting or Buying is AFFORDABILITY.



> see Database on : http://tinyurl.com/PHP-makati

Gains for ---- : q4-2004 : q4-2007: q4-2015 : '04 >'15 : Ave.% / '07>'15 : Ave.%

Makati Condo : P67,840 : P95,000 : 151,000 : +122.6%: 1.84% / +58.95%: 1.56%
Makati Rent-- : P ??? /m : P 539/m : P 883/m : + N./A + : + n/a +/ +63.82%: 1.58%
Price Inflation- : 100.00 i : 115.95 i : 164.50 i : + 64.0% : 1.13% / +41.44%: 1.09%


The more rapid increase in property prices, than price inflation has been aided by falling interest rates.



Affordability of the RENT to the tenant is a major issue driving Yields & Investment Returns

And also, what sort of Tenant or Buyer the Condo for are looking at is targeting.


LET's START : by looking at the Lower End ... the Mass Demand for all those small flats under construction...

With so many offices in the BPO / Call Centre field, it is important to know how much income workers in that sector learn


Average and Median Monthly Salary Comparison in Philippines in Customer Service and Call Center
Maximum: 183,333 PHP
Average: 31,647 PHP
Median : 22,000 PHP
Minimum : 8,000 PHP


> http://www.salaryexplorer.com/salary-survey.php?loc=171&loctype=1&jobtype=1&job=19


The median for Makati (alone) should be higher than that PHP 22,000 for the Philippines as a whole.

And the Makati Median may be at or above the Average of 31,647 PHP


If we assume P 30,000 is an average salary for Makati-based call center workers

- then 2X workers sharing, may be able to afford a Php 20,000 studio (1/3 of their combined salary).

And the better-paid workers may be able to afford a better or larger flat.


Studios above P20-25,000 per month would require more than two people, or better paying jobs


But I think this shows that as long as the BPI job market in Makati remains strong and growing,

you are not going to see many decent condos - including studios renting below Php 20,000 per month.


> from the Makati Tips thread: http://www.greenenergyinvestors.com/index.php?showtopic=20614

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(thanks to AX for suggesting this highly relevant article):


Hong Kong homeowners could be forgiven for fearing the worst. In a city notorious for its real estate booms and busts -- including a 70 percent tumble triggered by Asia’s financial crisis in the late 1990s -- property prices are once again sliding from all-time highs.

Yet there’s little reason to worry that the latest slump will spiral into another crash, if shares of Hong Kong’s biggest developers are anything to go by. After a 34 percent selloff from its June peak through Jan. 21, the Hang Seng Properties Index has jumped 18 percent in just two months -- outpacing the broader Hong Kong equity market by almost 7 percentage points.

More http://www.bloomberg.com/news/articles/2016-03-21/hong-kong-property-crash-averted-if-the-stock-market-is-right


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