Property - Signs of a slowdown?




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ORIGINAL POST

Posted by OffThePeak 4 yrs ago
Property - Signs of a slowdown?

/ Let me be crystal clear on this:
My cycles work suggest a Long Cycle High in 2016 +/- a year.
So any sign of slowdown in 2015 may be temporary. 2016 or late 2015 may be better timing
for a top. But the HK property market needs watching now imho.
And even if it takes a further jump higher, that might cause the HK government to take
some action(s) that would help to put in place a final high this year or next... or even 2017./

HK Property Slowing ?

"Home rents in HK fell for the first time in 12 months in March" - says the SCMP

"Views are mixed on rather the fall in rents is a prelude to a house price correction,
with that more likely to depend on when interest rates start to climb."

Centaline's Rental index - HK$32.80 - down 0.6%
(Secondary home rents at 100 housing estates)
The record high was HK$33

"New" properties ready for occupation include:
Park Signature in Yuen Long : 1,620 units
City Point in Tsuen Wan ------ : 1,717
Mont Vert in Tai Po ------------ : 1,071
The Austin in Kowloon -------- : 0,576
=======================> 4,984

Private housing completions hit an 8-year high of 15,700 units last year.

"The property market this year may show a surplus for the first time in three years,"
according to an analyst at Bocom Int'l. The same guy expects home prices to fall
by 10-20 % this year

COMMENTS

OffThePeak 4 yrs ago
whoops, the post was duplicated - so I will add this:

Biggest declines were seen in Whampoa Garden, with a fall of 3.1 per cent,
followed by Laguna City (-2.6%), and Mee Foo Sun Chuen (-1.3%)

Greene King 4 yrs ago
Interesting. I note however that of the 4 developments ready for occupation 3 are in NT, 1 in Kowloon & none HK island. Also the three biggest falls are Kowloon & NT. It seems falls in price are being driven by the mass market rather than luxury properties? If so it will be interesting to see what measures the government takes and when ie remove stamp duty restrictions implemented in recent years? Property prices are such a see-saw issue that measures nearly always seem to be taken too late by governments.

OffThePeak 4 yrs ago
Luxury properties suffered falls in Rents over the last 1-2 years.
But the N.T. and Kowloon may show the most impact from new supply over the months to come.

The Sub-indicies do not (yet) show greater strength on HK Island.
They show the contrary...

[Centa-City Leading Sub-index]
Area=== : This Wk. : Prev.Wk. : Prev. Month
HK------- : 151.49 : - 1.40 % : +2.76 % :
KLN ----- : 142.11 : - 0.37 % : +2.90 % :
NT (East): 144.67 : - 0.99 % : - 0.09 % :
NT (West) 125.49 : +0.61 % : - 0.14 % :
======
> source: http://www1.centadata.com/cci/cci_e.htm

OffThePeak 4 yrs ago
(another report talking about "mild" rent rises... rather than falls):

Rental hikes mild despite lease rush
Would-be renters can perhaps breathe a little easier. That 2015 will be a year for residential rental properties is anything but sure, with growth in rents likely to be more moderate than expected.
. . .
Prospective tenants have shown less regard for prices. Rent for a flat in a one- year-old project in Yuen Long climbed from around HK$24 per square foot to up to HK$27, with the monthly rate standing at HK$11,000 as opposed to HK$9,500 before the monetary authority's move, according to Centaline Properties.

Real estate analyst Derek Cheung Yat-ming expects rents to grow faster than home prices in 2015, while Midland's residential chief Sammy Po Siu-ming tips rents to gain 5-8 percent this year, in line with the increase in home prices.

That comes with a caveat. When interest rates remain subdued, owners who find it hard to sell their properties at the prices they want tend to post them for leasing.

More options for tenants have weighed on rents, especially where modestly priced new homes abound.

Tseung Kwan O alone has embraced more than 1,100 new flats since late March, thanks to the launch of Hemera by CK Hutchison (0001) and Twin Peaks by K Wah International (0173). Prices were set close to, if not below, used flats in the district, enticing prospective buyers away from the secondary market.

For every six new leases, there were four resale deals in Tseung Kwan O in February, and the gap between the two widened to 7:3 in March, and 8:2 so far this month.

Adding to the rental pressure are newly completed flats owned by investors. Midland chief analyst Buggle Lau Ka-fai said rents at some primary homes are even lower than those at secondary ones. "Landlords have relented."

Average rent at 50 estates in March inched up only 0.4 percent from a month earlier to HK$32.17 psf, according to Ricacorp.
. . .
"Ultimately, it's about users' affordability," said Billy Mak Sui-choi, a professor of finance at Hong Kong Baptist University.

He expects rent hikes to outpace wage growth by 1-2 percent in 2015.

> http://www.thestandard.com.hk/news_detail.asp?we_cat=16&art_id=156106&sid=44269805&con_type=3&d_str=20150416&fc=7
(From last Thursday, April 16th)

Greene King 4 yrs ago
The question is: what does the government want the market to do? I believe that they need newly completed homes to enter the market rather than be mothballed as there would be so much criticism with complaints made about both the government not meeting promises and developers rigging the market. Developers may also want the cash now to fund further projects especially given the state of China’s property market. But if prices continue to fall in the next few weeks/months will buyers buy or sit back and wait for prices to fall further? Buyers may also wait to see what existing cooling measures the government removes. So falling prices would be good for buyers but may cause alienation of the government by both existing building owners and developers. The feel-good factor of the economy may be impacted by falling prices and more jobs lost than gained ie estate agent jobs loss greater than new jobs created in construction or related service sectors all at a time when certain voices are expressing alarm about the potential impact on jobs & the economy as a result of falling visitor numbers. I really don’t see that the property market will be stable, there are too many local or global issues at the moment.

traineeinvestor 4 yrs ago
An anecdotal pointer to the market becoming saturated - I have started getting calls from agents (not ones I have dealt with before) asking me to viewings of new releases before they are opened to the general public. Leaving aside the violations of the Personal Data (Privacy) Ordinance, I view this as a possible indication of the market slowing down (or perhaps some agents are just getting creative in order to get a bigger slice of the commissions on offer).

My view is that the market is too expensive to represent good value for investors - of course, I've held that view for a few years now and the market has proven me wrong.

As a side issue, there are plenty of people who have made good money out of the share market in recent months (even a retiree like me with a stodgy portfolio of dull boring dividend orientated stocks has done okay). If history is any guide, some of those gains will likely be diverted into the property market at some stage.

Greene King 4 yrs ago
TRAINEEINVESTOR,

This kind of backs your thoughts.

http://www.chinadailyasia.com/hknews/2015-04/21/content_15253493.html

OffThePeak 4 yrs ago
Greene King,
That's Good article and a great chart comparing HK Property with HSI

http://www.chinadailyasia.com/attachement/jpg/site441/20150421/1429580957441_537.jpg

(The normal pattern is: HK Property peaks a few months AFTER the peak in stocks.)
But is that any guarantee we will see it again?

Using the 18 year Cycle - we should be close to a Top in HK.

1997 + 18 = 2015
2003 + 14 = 2017 - the "up" phase is normally 14 years
Ideally then: 2016 +/- 1 year

But we may get a Top in stocks first... with the Peak in property to follow a few months later

Greene King 4 yrs ago
Maybe I am misreading all these charts and figures however it seems rental prices are falling whilst purchase prices are still rising? If so is this because there are more people who were previously renting now buying despite the cost of purchase increasing?

Ed 4 yrs ago
Investing became very simple in 2008 when the central banks started printing trillions and unleashing it into the economy.

A 4 year old could outperform the smartest hedge fund manager by simply buying just about any index. There is not a single hedge fund that can come close to this performance


http://www.crossingwallstreet.com/wp-content/uploads/2014/01/image1376.png


And as the saying goes, if you can't beat the index then you have failed (or if you money manager can't, then fire him or her and buy a Vanguard fund).


Of course the property market (which has eclipsed 1997 by miles now) and the stock markets both appear to be massively over-valued...



But then this is the new normal. Where the central banks print and print and print and defy gravity.

So who know how high these markets can go?

The one that is for certain, nothing goes up forever --- and the concern has to be --- how much worse than 2008 is this going to be....

jocelroberts 4 yrs ago
I was not aware of this. I've always thought that home rentals are always on the go. I mean, the industry is not affected by globalization. Well, I guess, I misunderstood that part. How about commercial properties in HK? Do you have news about it?

OffThePeak 4 yrs ago
This looks ST Bullish, LT Bearish

Projected home supply raised to record 78,000 - says SCMP, today: pg.-1

That's for the coming 3-4 years, "as the govt accelerates land sales"
That's an increase of 4,000 flats from the previous estimate.

But that's not the whole story...
While we are waiting:
"The number of flats under construction in the first quarter fell by 2,000 flats
from 8,000 reported in the first quarter of last year"

The drop was due to:
"differences in developers construction schedules...
Supply will increase significantly in the second half of the year...
Because the govt has been increasing land supply."
=== ===

Here's the thing:
We have been hearing about coming Increases in Supply for years.
But we never seem to see it

OffThePeak 4 yrs ago
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 ??

OffThePeak 4 yrs ago
What happens after the Turn?

Singapore rolled over in 2013, just 15 years after the prior long cycle peak.

We are probably 2 years into a 4-6 year downturn.
In the last 12 months, rents and prices fell by about 5%.
This downturn may speed up when rates rise

OffThePeak 4 yrs ago
Featured Estate : ZENITH (Wanchai, HK Island)

http://www1.centadata.com/cci/estate_info_e.aspx?id=000650

What's going on here?

Prices are still below late 2012 levels

CHART: http://i273.photobucket.com/albums/jj235/jimolsen2/Zenith_zpsyeoalq24.png

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

OffThePeak 4 yrs ago
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 yesterda...\.
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

6_2015050320571248376model.jpg

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

OffThePeak 4 yrs ago
I visited the Eastern NT yesterday for a lunch and a look around.

One thing I notice was some ads in the window of one of the estate agents there,
showing mark-downs of something like 2-3% in the prices of three or four properties.

It was only one agent, and so maybe it was just a ploy. But it had been many months before I had seen that.


Greene King 4 yrs ago
A friend put their apartment on the market at the end of March. The agent said a similar flat went for $X so they recommended my friend ask $x plus 3% as there was a lot of market interest. Numerous potential buyers have visited but none of them have yet to offer the requested price so maybe the market has topped out for now? It's interesting though how you mention a 2-3% mark-down which correlates to the 3% increase in asking price the agency recommended.

OffThePeak 4 yrs ago
Yup.
I realize that some spoofing may be going on.
Hence I have mentioned it cautiously, to see if there is some confirming evidence.
Dealing at 2-3% below the Asking price is not uncommon in HK..
But 5-10% would be

OffThePeak 4 yrs ago
Bumping... a genuine property thread

Greene King 4 yrs ago
Google HK property prices and for the last few years or so experts (?) at various financial institutions have been predicting market corrections of up to 30% based on graphs, statistics, formula etc etc.

From Bloomberg October 2013:
Barclays Plc joined UBS AG and Bank of America Corp. in forecasting a Hong Kong property slump, predicting home prices will fall at least 30 percent by the end of 2015 as income growth stalls and supply increases.

Well here we are in mid 2015 yet prices are at or near to record highs. So when will the bubble pop and how far will prices fall? I wish I knew the answer! Quite frankly I doubt anyone (or at least few) really knows the answer, the world's economy is sailing in unchartered waters...

OffThePeak 4 yrs ago
I will stick with my long-standing forecast that the LONG PROPERTY CYCLE in Hong Kong
will peak in 2016 +/- 1 year...
To be followed by approximately 4 years of falling prices.

I have had this forecast for many years

Greene King 4 yrs ago
Interest rates obviously have a real potential impact on prices but so do other events. 2016 seems like a good peak expectation of max prices however there could be a ‘perfect storm’ beforehand ie Fed rates go up at the same time as say some geopolitical military conflict in Europe or Asia and also maybe Grexit? For me the biggest question is how far will prices fall? Taking the above mentioned bank expectations tabled back in 2013 for 2015 (25-30% falls) plus the 16% rise since will we see falls of 40-50%? Not unreasonable when you consider the Centaline CCI is now 141 yet back just six years ago in 2009 it was around 60.

By the way I spoke this week to a local estate agent who specialises in NT West village homes and she reckons on six more months of gains at least, around the 5-10% mark. Personally I think this is over optimistic given new supply and affordability.

OffThePeak 4 yrs ago
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

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

Greene King 4 yrs ago
Obviously the China stock market is likely to have an impact on prices however I have read two schools of thought on this:
1/loads of people lost money recently so they won’t now be able to invest in HK property
2/loads of people made money over the last year and see HK property as a safer bet compared to shares

And if US interest rates do rise will this have an impact? I personally don’t see the prospect of much of a rate rise if any at all. And the HK government has already said they may likely reduce cooling measures in order to stabilise the market if rates do rise which seems to point to the government not wishing a major fall in prices.

Then of course there is Greece which has not yet played out….

My feeling is prices will not change much in 2015, either up or down, my guess is that both owners and buyers will also take some time out over the next few weeks to see which way the wind blows.

As OFF THE PEAK states above it’s a confusing market…

OffThePeak 4 yrs ago
Confusion may go on for weeks and months.
We may get more highs,
But I still think the lifespan of this bull market is getting very short now

OffThePeak 4 yrs ago
Property Launches 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

Greene King 4 yrs ago
OFFTHEPEAK,

The looming supply you mention was more or less in line with another of your posts further up (3 months ago, 78,000 units). So whilst the market has known that there is a planned increase of flats about to come on the market the CCI index has not fallen and is now at a high of 145, a 1.34% increase over last month.

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


Greene King 4 yrs ago
Interesting though to look at the volume of transactions in July, especially in the NT:

http://transactions.gohome.com.hk/en/

I am sure demand is still there so why have transactions plummeted? Is this linked to the new supply, and related expectations of price falls, or perhaps interest rate hikes?
Land sale prices have not really reduced and construction costs have not fallen either so unless developers are willing to cut sale prices (and hence their profit) prices will be unlikely to fall much at least in the short term.
My 2 cents worth, I wonder if I am correct or maybe way off the mark?

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OffThePeak 4 yrs ago
"The looming supply you mention was more or less in line with another of your posts further up (3 months ago, 78,000 units)."

yeah. But read further into my notes and the article...
There are 2,000 flats coming this month, and 5,000 in inventory, to be sold.
The real problems (and price cuts) may not start until the inventory of flats
ready to be sold hits 10,000-15,000. That may be some months away.
But sometimes the market will anticipate

OffThePeak 4 yrs ago
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

Greene King 4 yrs ago
Any major land sales coming up? It will be interesting to see what the sentiment among developers is/how much they are prepared to pay for land (it will give an indication of their expected home price direction).

OffThePeak 4 yrs ago
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 teh 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

traineeinvestor 4 yrs ago
Some additional data points:

1. bank valuations (used for mortgage calculations) in Mid-levels are higher now than at the start of the year

2. retail rents are very high - there is no shortage of optimists starting or expanding retail businesses but the survival rate is poor. I am seeing shops in Mid-leves and Kennedy Town (the two areas I know best) shutting down on a regular basis with "high rents" being the cause. Given the very low yields (rent/value) it will not take much in the way of a fall in rental income to potentially have a big impact on values - and retail sales are under pressure due to the fall in visitors from the mainland. The idiots who told the PRC tourists to shove off have got what they wanted - lower sales leading to shelving of expansion plans, some store closures and increased unemployment. Unemployment is not much of an issue yet - it is still very hard to get staff for bars and restaurants - but if the trend continues it could be.

On the plus side, HKMA data conforms what is well known - the combination of LTV lending restrictions and the use of P+I mortgages means that equity levels in HK property are exceptionally high both in absolute terms and relative to both property values and income levels. Household balance sheets are very robust. Negative equity is a complete non-issue.

Greene King 4 yrs ago
The loudest voices recently complaining about high rents seem to be from the luxury retailers which would kind of make sense as they have probably been hit the hardest by a fall in customers; the small drugstore retailers in Yuen Long or Shung Shui still seem busy selling milk powder, shampoo etc etc. I would take a guess and say that the luxury retailers are also more likely to be in buildings owned by the big publicly listed developers (IFC, ICC, Pacifc Place etc) whilst the lower end drugstores are more likely to be located in buildings owned by smaller developers/landlords. Landlords are very reluctant to reduce rents but some sectors may well be forced to do so in the near future. If my assumptions are correct I wonder how the big developers will react in terms of future projects ie move more towards residential projects and thus create more demand for residential zoned land? Or maybe even look overseas for more opportunities and therefore reduce their willingness to undertake HK projects for which they do not currently have a land plot? And what will the impact on property values be?
Any industry experts care to chime in?

OffThePeak 4 yrs ago
All good points, TI.

And I agree that the nonexistence of negative equity, and huge equity build-up among HK investors reduces the risk of a bank-induced panic.

But once HK investors perceive there is downside, they may revert to their :"sitting on their hands mode", and not buy much. We have seen them in that mode for 2-3 years at a time, and it was only about one year ago that they got their confidence back, and started buying properties again above the $4-5 million price point.

Duracell,

Expensive flats are a consumer item for some wealthy mainland buyers, and so if they stop buying Gucci, them may also stop buying Homantin or Kowloon Station. But it is the shopowners who provide employment, and also earn money to spread-around the HK economy who suffer too. And so the impact may be indirect

traineeinvestor 4 yrs ago
"Anyway these shops that close down sell useless things. "

Not all of them - the ones I am seeing close in my area are mostly in the food business (western and asian food) but also personal services (foot massage), stationary, hardware, electronics and clothing (not designer labels).

OffThePeak 4 yrs ago
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.

OffThePeak 4 yrs ago
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
[IMG]http://i273.photobucket.com/albums/jj235/jimolsen2/AA-no2/ab02/CC-LI_zpswrqystjk.png[/IMG]

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
CHARTS
[IMG]http://i273.photobucket.com/albums/jj235/jimolsen2/AA-no2/ab02/CC-RobinPl_zpsybhotliq.png[/IMG]
[IMG]http://i273.photobucket.com/albums/jj235/jimolsen2/AA-no2/ab02/CC-Sorrento_zpsgeibn3f4.png[/IMG]
[IMG]http://i273.photobucket.com/albums/jj235/jimolsen2/AA-no2/ab02/CC-Zenith_zpslqjfolbs.png[/IMG]

And two estates the market loves
4. Taikoo Shing : $15,186 psf
5. Fanling Centre : $ 7,672 psf
==
CHARTS:
[IMG]http://i273.photobucket.com/albums/jj235/jimolsen2/AA-no2/ab02/CC-TaikooS_zpsgs6xpbd3.png[/IMG]
[IMG]http://i273.photobucket.com/albums/jj235/jimolsen2/AA-no2/ab02/cc-Fanling_zpsyknf02kl.png[/IMG]

OffThePeak 4 yrs ago
"... these shops cater for the local HK people, not mainland tourists. And these shops close because the rents to up. If there are fewer mainland tourists, maybe the rents will go down ..."

Maybe there is a change in how people show, and more are buying:
+ Online, or
+ Through malls

"Cheating" local shops of their old business

Ed 4 yrs ago
http://www.msn.com/en-us/money/travel/hong-kong-retail-rents-hit-by-slowdown/vi-BBlD5X8

OffThePeak 4 yrs ago
I wonder what impact, if any, a 2% drop in the RMB value will have on HK's property prices?

Might Chinese suddenly see HK as overpriced and/or try to cash a profit now in HK, to buy some mainland property?

Greene King 4 yrs ago
Or maybe a rush to get the cash out before the next devaluation and/or stricter controls on currency outflows results in a short-term increase in property prices here?

OffThePeak 4 yrs ago
Yes, you are right. A 2-3% drop in the Rmb matters little.

But if/when it reaches 5-10%, there may be a different attitude

OffThePeak 4 yrs ago
Too Bullish ? (after all these UP years)

The Standard says today that GoHome.com.hk interviewed 2,964 HK citizens last month:
+ About 60% expect home prices to rise 5-10% in the second half, and
+ Over 60% will consider buying homes price below HK$5mn

(Personally, I think people have become too complacent after so many years of rising markets, and I see an excellent chance for an important Peak within the next 6 - 12 months, or let's say: before the middle of 2016._

OffThePeak 4 yrs ago
Well, I disagree with that.
After many years of trading, I know that the largest number of people are Bullish near a peak.

Markets start falling as there is a shift away from bullishness.

It is crazy to think that people stop being bullish, and markets trade sideways as people become less bullish. That's simply not how sentiment works

OffThePeak 4 yrs ago
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 like Taikoo Shing

OffThePeak 3 yrs ago
Jittery homebuyers forefeit 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

Greene King 3 yrs ago
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?

OffThePeak 3 yrs ago
"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


OffThePeak 3 yrs ago
I will wait until mid-September, at the earliest.

And then I may buy a stock like Hang Lung properties, which is cash rich, and has strong cash flow. I would hope to get a dividend yield above the Net Yield I would have had from renting out my property - which I have sold.

OffThePeak 3 yrs ago
Hang Lung's balance sheet is stronger than those others, I believe.

And it's core assets are shopping centers in China, which explains the long slide perhaps.
But they have enough cash, and enough savvy to take some advantage of a slowdown in HK

OffThePeak 3 yrs ago
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."

OffThePeak 3 yrs ago
They don't know how.

But the smart buyers who see this, might get a further 1-2% rebate thru the agent

OffThePeak 3 yrs ago
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

OffThePeak 3 yrs ago
High end stuff is not selling

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)



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