property investment advice

Hi All,

After spending 10 years in HK and seeing the prices double for the apartment I have been renting, I have finally managed to save some money for downpayment.

I have 2M for downpayment and with some effort, I can stretch it upto 2.5M. Now given that for properties>6m, we need to make a downpayment for 40%. that means that:

1. for second hand apartments, my budget is 6-6.5M
2. for first hand apartments (under construction), developers offer 80% mortgage and that means I can buy upto 8.5-9m apartment. but then monthly payment might bea burden. I want good transport options closeby and want to buy something in lessthan 20 years old building.

we are a family of 5 and currently live in tung chung in 860 sqft (net) 3BR apartment. Now with the above budget, I don't think I can buya similar sized apartment so if I buy, it will be for investment and will be for capital gains etc.

now I want to seek your advice on

1. firstly, shall I even buy in HK right now? property at all time high? My investment horizon will be around 5-7 years. we have been hearing about property bubble but it doesn't seem to end, may be there is too much cash and demand. what do you say

2. if I buy, shall I buy 6-6.5M 2BR 500 net size, make 40% downpayment and then rent will almost be same as my monthly downpayment. no extra cashflow will be needed (may be 1-2 k atmost). tung chung is one area, which others?

3. or shall I consider these first hand projects, go for 8-9m 2br 500 sqft ? make downpayment of 20% and hope property will go up and I will somehow handle the extra cahsflow needed each month. ocean pride in tsuen wan? any other recommendations?

4. if not hk, what other countries would you recommend, UK, Singapore? US?

Many many thanks for your help

Hi I am happy to answer your queries please whatsapp, message or call me on +852 6731 3411

Hi,

"2. if I buy, shall I buy 6-6.5M 2BR 500 net size, make 40% downpayment and then rent will almost be same as my monthly downpayment. no extra cashflow will be needed (may be 1-2 k atmost). tung chung is one area, which others?"

You are still paying the equivalent or more than rent in monthly reimbursements; but you are short of your down payment and purchasing costs; probably around 3M HKD. Of course you will eventually own the place at the end of your mortgage with a profit (or not); + upkeep costs throughout the ownership period (repair, renovations etc.).

In an expensive low yielding environment like HK, you can think about what your 3M HKD can yield smartly invested either in property overseas that you could buy cash and let/manage via an agency. Some countries can yield enough cash to cover your rent, while also having high upside potential. So you basically end up with an asset; and it pays for rent.

You can even consider some low maintenance investment like a decent and solid property REIT that will yield enough money to cover your rent; and also have the upside potential in terms of share price.

With these scenarios you have the flexibility to upsize, downsize as you don't know what's going to happen in the next 25 years (job, etc). I did the math and research for myself so I thought you'd be interested in these options.

Do not buy new property....grossly overpriced. If you buy for rental hedge buy in area where rental market is strong. Urban dense area.

"shall I even buy in HK right now? property at all time high?"

NO.
Buy elsewhere where you can get a better return - example: I get 11% pretax in Philadelphia.
And RENT in HK, where yields are typically 3% or less

At 11% pretax, your HK$2.5 million, will get you HK 23,000 monthly.

With that, you can rent a new flat costing HK$6 - 8 million or more, if you choose wisely.
And you will not be at risk of riding Hong Kong prices down, when the bubble bursts

"so if I buy, it will be for investment and will be for capital gains"

Tell me, WHERE do you think you can make a capital gain in HK?
I think it is very very hard now to find a property more likely to rise in value than to fall

Hi BSC1280, did you come to a decision yet? I agree with the others here, capital gains can be found much easier looking elsewhere than HK

Hi

I know that real estate in Hong Kong can be a jackpot only if you invest well. I’ve been also looking for somewhere to invest, and I found a lot of the articles mention Hong Kong for property investment. I think it’s a good deal to invest in Hong Kong now, and I think you can even make it more high priced with renovation.. cuz it’s pretty packed in Hong Kong and I think people find it more attractive when it looks more spacious. Maybe check this video? I personally found this video really usefull https://youtu.be/9f5PjSt6u-k?si=fbkSILuT_HExxU2b