Posted by
Sherif
18 yrs ago
Is the HK property market such that one can buy a flat, renovate and sell like UK? Thanks in advance for your opinions.
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You can try, but between brokerage fees, approvals, architect costs, govt. approvals documentation, and high land prices, you are unlikely to make a profit by "fixing up and flipping." Average yield on property in Midlevels, the Peak and Southside is between 3% and 3.25%. Mortgage rates are approximately 4.75%. Thus, you'll be running about 150 basis points of negative carry while holding the property plus utilities, government fees and most likely residence fees.
You can give it a try, but if it was that easy, HK'rs would be doing it in droves. Local HK'rs are obsessed with property...
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i see. thanks for your reply.
i understand that there is a negative cost of carry, it's the same in England...
is it so hard to get permission to turn 1 or 2 beds into a 2 or 3 bed?? For example, i once stayed in a huge one bed in conduit road which was about 13k. I wondered if it would have been possible to turn it into an economical 3 bed 3 bath...the key would be to get management to give permission for building work.
if they do, then i would be renting the same property for a higher yield or able to sell it for a capital gain.
do you have an idea whether this side of things is any harder in hk...? i.e.
difficulty in getting planning permission from managemnt and or council...as well as issue of older buildings losing value because of the fact that mortgages on older buildings are harder.
what do you think?
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It depends on a lot of things, building codes, structural issues, etc. You'd definitely need an architect to help advise you on issues such as these, as each building is unique.
Sorry I can't be more detailed...
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you've been very helpful - thanks
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So it seems that for the benefit of getting a mortgage and resale one has to buy newer build which are often much smaller.
In this case, i have a second question. What of the HK property market as a whole?
Aside from the weakening $$$, do you feel there is a threat on property prices? As HKs importance declines relatively to China and Macau.
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