Taikoo Shing and LOHAS are key bellwethers




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ORIGINAL POST

Posted by OffThePeak 3 yrs ago
Taikoo Shing and LOHAS are key bellwethers

Given the greater liquidity there, Taikoo Shing (TKS) in the Quarry Bay area may be the best estate to watch in Hong Kong, for clues about where the HK property market is headed

(My original post said):
" The government's cooling measures have stopped prices from rising,
the flip side is they will also stop prices from falling. " - LGMV
Cough, Cough!
Tell that to people in Taikoo Shing !
.
(note that LGMV has made several accurate calls in the past.
I treat his observations with respect - but I am a data junky and I come up with my own ideas.)

Will we see what is in this chart?? (It is current data, with the historical correction added to it.)
The Drop indicated is 33% from about $15,000 psf to $10,000 psf.
http://i273.photobucket.com/albums/jj235/jimolsen2/AG/TKS2_zps2mddviyx.png

Remember: Just One of several possible scenarios.

Week : CCLI // Taik.Sh
PEAK: 146.92 / 15,119 / (09/13)
12/13: 137.30 / 12,721 /
Chg-: -6.55% / -15.87% :
===================

DATABASE Actual Sales
Twr-Flr-fl- : Date--------- : Price : Size : Per SF
PeakLevel 09/13/2015 CentalineIndex $15119
(49) 13 H : 07/12/2015 : $1148: 800 : $14350
(16) 24 H : 08/12/2015 : $8.15 : 691 : $11795
(21) 05 E : 10/12/2015 : $9.50 : 800 : $11875
(23) 25 C : 10/12/2015 : $9.05 : 675 : $13407
(60) Hi. H : 21/12/2015 : $9.50 : 708 : $13418 < Note high fl.
(60) 28 E : 24/12/2015 : $11.0 : 717 : $13,253
(50) 19 D : 28/12/2015 : $6.44 : 608 : $12,799

COMMENTS

OffThePeak 3 yrs ago
Skeptics stepped forward:
/ 1 /
"Off the Peak. Those figures are meaningless. Try and buy a flat at those prices in the developments concerned. You won't get very far. Some people have panicked and this will show up in the now ultra-illiquid Centadata Index."
- LGMV

/ 2 /
"Yes, and they probably represent the crappest flats.
I came across a flat for 750 sq. ft. net flat for 6.228 M (its final price) in an estate near mine. I didn't know the seller was willing to go so low, or I might have bought it. (although it's still very expensive, considering my finances). Now you can't find such a large a flat for that price in the estate. The cheapest goes for 7 M.
My point is that you have a few people who want to sell at any cost, and are willing to sell with a big discount. These are able sell, and this shows in the centa data index. The majority want to sell with only a tiny discount and don't manage to sell. So the market price drops, but this only includes a tiny number of the total number of flats for sale. "
- D-Cell

And I responded:
When in doubt - look at the Actual Data....

Centaline's latest input for TKS
- is based on just 4 transactions in Dec. 2015

Twr-Flr-fl- : Date--------- : Price : Size : Per SF
(21) 05 E : 10/12/2015 : $950 : 800 : $11875
(23) 25 C : 10/12/2015 : $905 : 675 : $13407
(16) 24 H : 08/12/2015 : $815 : 691 : $11795
(49) 13 H: 07/12/2015 : $1148: 800 : $14350
=========
Even so, in a time of few transactions, what else could they base it on?

> data source: http://www1.centadata.com/eptest.aspx?type=3&code=OVDUURFSRJ&info=chart&code2=&page=0

Lowest prices (per sf) were the 5th floor, and the 13th floor - these are not necessarily the crappest flats. But they are not high floors.

The drop of 16% may be exaggerated. But i would not be at all surprised to see more transactions done in the near future at 10% (or more) off peak prices of $15,000+

More sales at $13,500 per sf (gross) or lower would confirm a 10% drop

OffThePeak 3 yrs ago
MORE DATA:

There are a number stacked up for sale at $15 millon - take your pick!

Detail : Taikoo Shing
(T-07) Tien Shan Mansion, Kao Shan Terrace
1,061 :945 s.f. : Sell $15.00M (14,138 psf)
+
(T-16) Yee Shan Mansion, Kao Shan Terrace
1,061 s.f. :945 s.f. : Sell $15.00M (14,138 psf)
+
Kao Shan Terrace
1,061 s.f. :945 s.f. : Sell $15.00M (14,138 psf)
+
(T-15) Foong Shan Mansion, Kao Shan Terrace
1,061 s.f. :945 s.f. : Sell $15.00M (14,138 psf)
+
(T-47) Tien Sing Mansion, Sing Fai Terrace
1,061 s.f. :945 s.f. : Sell $15.00M (14,138 psf)
+
(T-43) Primrose Mansion, Harbour View Gardens Eas
Gross:1,061 s.f. Saleable:945 s.f. Sell $15.00M ($14,138 psf)
===
> http://www1.centadata.com/pih09/pih09/estate.aspx?type=3&code=OVDUURFSRJ&lang=eng&source=data#listing

Try: $13,500 x 1061 = : $14.3 Million, and see what happens !
I think you might get some takers

OffThePeak 3 yrs ago
Prices have fallen a little from peaks but remain high (17x loan to salary on average) as the economy is doing quite well (or so it seems). If the economy falls next year then that is when prices will likely fall further and faster, for now it is just a wait and watch situation which cannot and will not last forever - something will happen to push the market up or down, I think down rather than up is most likely in the near term, how much is the big question however.
. . .
Just four TKS sales in December? How many estate agents were chasing these sales I wonder? Sales cannot remain at these low levels and not have an negative impact on the economy (which in turn is likely to impact prices).
- G.K.

Peak in TKS was $15,181 (on 4.Oct 2015)

At least 5 flats are stacked for sale right now at $14,138 per sf, Gross

- that means they are OFFERED at a drop of -6.87% below the market peak.
And one of more of these would undoubtedly take less.
Last done was $11,875 - that's -21.8% below the peak.
(Yes, a drop that big may be a one off, "crappy flat")

So where's the real market in TKS??
At least 7% off the peak - obviously ! (there are 5 flats offered there!)

Use the data, gentlemen. It is available if you bother to look!

OffThePeak 3 yrs ago
why not talk to the agents in TKS, and see if you can get a decent flat
at below $12,000 psf? (you can argue that there have been transactions below this price)

That would be a nice fat -21% discount to the peak, at $15,181.

Actually, i am not completely serious in suggesting this,
because I think the market will go lower from here, and it is too early to buy.
But if you believe others who think the market cannot drop much, it may be worth a try.

OffThePeak 3 yrs ago
You will see more "good deals" imho.

TKS is the bellwether, and the damage is likely to spread out from there.
You have seem my calculations on the other page?
It shows that prices drop $200-300 psf (Gross) as travel times go up.

If offers in TKS are now at about $14,000, then maybe some place like LOHAS Park, which is at least 18 minutes further away (more, if you get the trains wrong) - using 20 minutes you can calculate:

$14,000 - (20 mins x $300) : $14,000 - 6,000 : $ 8,000
$14,000 - (20 mins x $200) : $14,000 - 4,000 : $10,000

So in LOHAS, you might expect offers at $8,000 per sf, gross (or more)
Anyone interested in LOHAS might check to see how accurate these guesses are right now.
The figures I am seeing on Centaline for LOHAS are now at $6,757 for recent transactions.

So maybe the 20 minutes extra travel time is not accurate - the price difference of about $7,000, would suggest a 28 minute travel time difference using $250 per minute.

What areas are you looking at?
You might try some similar calculations, measuring from a more liquid Estate than your own.

I think the recent TKS transactions suggest that making bids as much as 5-8% below wherever the offers are stacked up (where you want to buy) might prove to be a successful strategy.

Greene King 3 yrs ago
Recently calls to remove the additional cooling measures have increased as these additional costs have had an impact. Here is my take on this:

The additional measures were put in place 2012/2013. What were they supposed to achieve?
-hold prices as they were at the time?
-limit further increases?
-cause prices to fall (to more affordable prices)?

Remember at the time there was talk about the average guy had been priced out,prices had risen too high etc.

Well since then prices have risen from around 123 on the CCI in March 2013 to 137 now. So looking at the three possible intended achievements (of the measures) none of them have been met yet. My take is there will be no reduction in the special measures until the CCI falls to around 120 or so, a fall of around 12% from now.

OffThePeak 3 yrs ago
I agree with you Greene King.

120 or so looks like a key support level.
Using 147 as the Peak, that would be a fall of 18.4%.

Interestingly, we are already seeing some occasional sales that look like they are 15-20% below the peak. But that may be misleading since it may involve comparing sales of poorly maintained flats on low floors, with the average index price for a popular estate.

So recent sales at Taikoo Shing may be an example of that

Greene King 3 yrs ago
The problem the government has is property prices can be a real see-saw, once the see-saw tilts in favour of a fall it can be hard to stop; and its easier to cool a market than to boost one. For instance as I have mentioned before I feel a lack of activity will mean lay-offs by agencies, removal companies etc which will impact the local economy which in turn may take prices lower. Agencies dominate the local shop rental in some areas and they will close or force rents lower. How long before we see developers giving away incentives such as cars? (cutting prices openly is the last measure they wish to take). Or demonstrations by agents and others demanding the additional cooling measures are removed? I am not as much of a doom-and-gloom guy as ED is however I do see the global economy falling in 2016 which will exacerbate the problem.
Us old guys have seen these types of falls before, it will happen I believe. When though, by how much and will there first be a dead cat bounce? If the CCI falls to 120 then stays there the government will have got lucky, removing the additional measures though will do little if the economy is going down and people start fearing for their jobs as unemployment rises among those able to afford to buy.

OffThePeak 3 yrs ago
"a lack of activity will mean lay-offs by agencies..."

Yes.
Interesting observations on a visit to Regency Mall in Fanling this morning:

+ One of the 4-5 agents in the mall has just shut down, their shop is now for rent

+ Centaline had a big sign in front of the mall, showing changed prices, with old ones with a line through them, and new lower prices on offer. Discounts were in the region of 3-5%

This is a sign of an emerging Bear market. I can recall having seen these types of signs back in the second half of 2008. And I can recall several weeks of feeling shell-shocked, and having some awkward conversations with agents whom had sold me flats.

I will make a bold guess - but don't take it too seriously:
We will see a slide to about 120 in the Centaline index by Feb.-March, and sometime after CNY the government will remove or reduce the cooling measures. There will be a surge of confidence and the index will rally, but will stall out around 130-135, before it starts heading back down again. By then, we may be seeing a serious drop in global stock market indices

It may not happen exactly this way. But it is the sort of volatile action that we can expect in a bear market

Greene King 3 yrs ago
OTP,

FYI this is the MTR tender I mentioned before, one to keep an eye out for.

MTR CORPORATION officially invited the property developers to tender for the development of LOHAS Park Phase 9 in Tseung Kwan O and the deadline for submission will be at 2 p.m. on 28 December 2015.
The project has received 19 letters of intent at an earlier time. LOHAS Park Phase 9 covers a site area of approximately 138,500 sq. ft.. It can accommodate three buildings with up to 1,780 residential units.

http://www.aastocks.com/en/stocks/news/aafn-news/NOW.704728/1

OffThePeak 3 yrs ago
LOHAS Park is definitely a location to watch !

Like TKS, it is a sort of bellwether too,
and it has good transport links to:
+ Quarry Bay / Taikoo Shing
+ Tseung Kwan O / Park Central etc.

I monitor, the time and transport arbitrage between these locations.
Generally speaking, LOHAS is priced at about 50% of Taikoo Shing (TKS) at Quarry Bay.

mo CariC: Lohas: PkCen : TaikSh : L/TKS :
13: 6,336 : 6,146 : 7,551 : 12,149 : 50.6%
14: 5,809 : 6,146 : 7,722 : 10,936 : 56.2%
15: 6,538 : 6,356 : 9,168 : 12,627 : 50.3%
F. : 6,573 : 6,638 : 8,978 : 13,319 : 49.8% :
M : 6,984 : 6,616 : 9,371 : 13,906 : 47.6% :
A : 6,260 : 6,617 : 9,461 : 14,347 : 46.1% :
M : 6,958 : 6,864 : 9,531 : 14,356 : 47.8% :
J. : 6,656 : 6,964: 10129 : 14,243 : 48.9% :
Jl : 6,594 : 7,084: 10034 : 14,956 : 47.4% :
A : 7,577 : 7,284: 10160 : 14,923 : 48.8% :
S : 6,514 : 7,065: 10187 : 15,101 : 46.8% :
O : 7,047 : 6,911 : 9,449 : 13,947 : 49.6% :
N : 6,856 : 6,872 : 9,194 : 13,731 : 50.0% :
D :

(Caribbean Coast is in Tung Chung, at the other end of HK.
It is also a long journey from Central, and has been priced at a similar level to LOHAS)

I think that current 50% gap will narrow over time because:

+ As more properties are completed there, more MTR trains will go directly to the LOHAS station
+ A mall is planned for LOHAS near the station. When it opens, it will be a better place to live

OffThePeak 3 yrs ago
I checked after LGMV's question from another thread...

Here's another - from a high floor, which confirms the downtrend

H Upper Floor (T-60) KWUN TIEN MANSION HORIZON GARDENS
Centaline $9.50M 593s.f. 708s.f. $16020 $13418 21/12/2015


Twr-Flr-fl- : Date--------- : Price : Size : Per SF
(21) 05 E : 10/12/2015 : $9.50 : 800 : $11,875
(60) Hi. H : 21/12/2015 : $9.50 : 708 : $13,418 < NEW

Greene King 3 yrs ago
So prices have fallen 5-10% since the peak a few months ago. Why? The local economy is basically the same, demand is still there. So logically it must be due to other reasons such as umaffordability perhaps? I believe though that the major reason is the general feeling that prices will fall, that falls have been driven by sentiment. I know I have mentioned it elsewhere however if the economy turns down then prices may well drop quite a bit more as economic factors impact prices and sales. And it looks more and more like the economy will drop in 2016/2017.

OffThePeak 3 yrs ago
Yes!
That's it exactly. There's been a shift in sentiment.
Buyers are no longer willing to pay asking prices, they now want a decent size
DISCOUNT to what they perceive as the market price.

The Offers were stacked at $14,100 psf,
But the last sale was at $13,418 psf - and that was for a high floor !.
When offers are stacked like that, someone will cut price, and the buyer
is likely to get a discount.

Let's watch this... we can see real life market dynamics in action.
I have studied this stuff for years, in various markets.

OffThePeak 3 yrs ago
RENTS under pressure?

There's an advert on a well-known HK website, were a recently renovated 2BR flat in TKS (actually, Kornhill, Block P) is offered at just $18,000 per month - and the "price is negotiable"

Size: 588 sf x $13,500 psf = $7.938 Million, Estimated Flat Value
That's a gross yield of just 2.72%

Frankly, if that $13,500 per sf price estimate is correct, this is a very poor yield
The photos look nice though

Greene King 3 yrs ago
OTP,

I would not be surprised to see rental yields fall. There is likely to be an increase in units available for rent as owners decide to wait for sales prices to rise in the mid to long term rather than sell now.

Greene King 3 yrs ago
According to The Standard six tenders were received for Phase 9 Lohas Park, the same number as Phase 8.
http://finance.thestandard.com.hk/en/business_news_view.asp?aid=164650

The project received 19 letters of intent for the project which will provide sea views.
http://finance.thestandard.com.hk/en/business_news_view.asp?aid=163514

OffThePeak 3 yrs ago
Thanks

I see that the Price (as suggested) was Off the Top - but not by a lot

Among the bidders were CK Property (1113), Sun Hung Kai Properties (0016), Sino Land (0083), New World (0017) in partnership with Far East Consortium International (0035), Henderson Land (0012) and Wheelock (0020).

The premium for the project is around HK$2.85 billion, or HK$2,545 per sq ft floor area - 10 percent lower than the level in the previous phase. At least 15 percent of the profit from the development will go to MTRC. Centaline Surveyors director James Cheung King-tat said profit-sharing ratio offers to MTRC, deemed crucial in selecting the winning bid, may be more conservative at this time as the housing market faces downward pressures.
=== ===

I think the way it works is:
The MTR sets the price, and then the bidders compete on how much profit share they will give up to the MTR.

If the tender process fails, it will be a sign that the price was set too high

Greene King 3 yrs ago
OTP,

Did you see the article about property prices in the SCMP today? Confidence continues to disappear....

Good for buyers, bad for developers? Hong Kong property prices cooling amid ‘oversupply’

http://www.scmp.com/news/hong-kong/economy/article/1896675/good-buyers-bad-developers-hong-kong-property-prices-cooling

A few interesting points made are:

The government is poised to beat its land supply target for the private sector to build 19,000 new homes this year by 1,300 flats

“We will not adjust our policy because of short-term fluctuations and it is also inappropriate for us at this preliminary stage to do any significant policy adjustment.” development minister Paul Chan Mo-po

Louis Chan Wing-kit, managing director of Centaline Property Agency’s residential department, expected the news would deal a severe blow to home-buying confidence.

“Negative land sale outcome will hurt buying demand as well,” said Chan, who forecast home prices would fall 15 per cent before the end of the first quarter of next year.

On that last one not sure if he expects a 15% fall from now or from the peak. From a casual glance it does seem however that rental prices in my area are also down from a few months back, around 10% or so. I wonder what the CCI will be today?

OffThePeak 3 yrs ago
Wow!
A miss of 1,300 flats to the upside ...

Together with the flats sited on other plots sold this year and the 1,100 units to be developed by MTR Corporation at Lohas Park, the overall figure is expected to reach 20,300 units at the end of the fiscal year.

That's unusual, since for years we have seen misses to the downside.
That's likely to set a negative trend for the new year

====
Latest sales at TKS show downwards pressure:

Twr-Flr-fl- : Date--------- : Price : Size : Per SF
(21) 05 E : 10/12/2015 : $9.50 : 800 : $11,875
(60) Hi. H : 21/12/2015 : $9.50 : 708 : $13,418
(60) 28 E : 24/12/2015 : $11.0 : 717 : $13,253 < NEW
(50) 19 D : 28/12/2015 : $6.44 : 608 : $12,799 < NEW

FLAT E 25/F (T-60) KWUN TIEN MANSION HORIZON GARDENS 28 24/12/15 $11.00M 717s.f. 830s.f. $15342 $13253
FLAT D 19/F (T-50) YIU SING MANSION SING FAI TERRACE 34 28/12/15 $6.44M 503s.f. 600s.f. $12799 $10730

LOHAS PARK
Proj-Tower-Floor-fl : Date--------- : Price : Size-sf : Per SF
LePrime-07 20R A : 16/12/2015 : $6.60 1067/813 : $8,229 < NEW
Capitol. -03 37R D : 18/12/2015 : $6.30 : 943/704 : $8,949 < NEW
LePrime-07 20R A : 22/12/2015 : $5.80 : 909/680 : $8,529 < NEW
LaSplen.-11 19R C : 23/12/2015 : $6.10 : 961/727 : $8,391 < NEW
Capitol. -05 41R B : 23/12/2015 : $5.30 : 684/519 : 10212 < NEW
LaSplen.-09 20R A : 29/12/2015 : $5.95 : 901/676 : $8,802 < NEW



Greene King 3 yrs ago
So the CCI announced today shows the seventh straight fall, now at 135.89 and down from 136.86 last week. The last time the index was below 136 was January 2015. Predictions for next week and how many more weekly falls in line?

http://202.72.14.52/p2/cci/SearchHistory.aspx

OffThePeak 3 yrs ago
Here is ONE of several possible scenarios that would fit my Cycllcal concept.

I have simply tacked the price action from 1997 to 2001 onto the prior peak.
These are HKD per SF (Gross) prices in Taikoo Shing:

The Drop is 33% from about $15,000 psf to $10,000 psf.

http://i273.photobucket.com/albums/jj235/jimolsen2/AG/TKS2_zps2mddviyx.png

Remember: Just One of several possible scenarios.
The drop in the first 12-18 months (if that's how long it lasts) may not be so steep.
And the following rally might be different

I will plan to revise this scenario, or add another one to it, when I have sufficient info to do so.

OffThePeak 3 yrs ago
TKS: NEW LOW at $11,482 psf

In case anyone here is interested, bellwether estate, Taikoo Shing, has hit a new low at $11,482 psf. That's 24.4% below the $15,181 psf peak of Oct. 4th, 2015.
.
By comparison, the CCLI index is down from 146.92 on 9/13/2016 to 127.46 - that's 13.2%
Reference transaction price at LOHAS is $6,334, 13.7% above Caribbean Coast at $5,570.
> http://www1.centadata.com/eptest.aspx?type=3&code=YAPPWPPJPW&info=chart&code2=&page=0
These two estates have tracked each other in the past
The LO/TKS ratio is holding up at 55.2% - one of the best levels since Jan. 2014, and LOHAS has often been half the price of Taikoo Shing,

It is TKS and CC/tc that looks relatively cheap now


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