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Property News Weekly Digest
2018/4/7
〈Asian Post, April 7, 2018〉An Australian friend of mine who has been in Hong Kong for decades often regrets that he never took the plunge and bought a flat. Otherwise, he would be sitting pretty now. But what stopped him all these years?

"Every time I looked, the same price here would have got me a much bigger house with front and backyards back home," he said.

Perfectly understandable, but that's not how real estate works here. In overseas developed economies, at least with cities that have not had a crazy property bubble in the past decade, you are usually rewarded with bigger and better houses as you progress up the economic and career ladder.

Your quality of life, at least at home, improves over time, assuming nothing bad happens to your career.

Not so in Hong Kong; most of us are living in flats not much bigger than the ones we grew up in, even if we have reasonably good jobs. That's because long ago, the city made a bargain with the devil.

We have always tried to pack as many flats as possible into our space-starved city; let quality of life be damned. Especially now, the government's very legitimacy rests on improving home affordability and providing more flats.

But things will only get worse, assuming the government succeeds in meeting its targets over the next decades.

Officials project building 470,000 public and private units between now and the second half of the next decade.

In a sign of things to come, just look at the proposed development density at two new public housing estates in Fanling North and Kwu Tung North. They are expected to offer a total of 48,400 flats between 2023 and 2031, a proposed increase of 34 per cent, but only by tweaking the development density of the areas. We can expect more such density adjustments at the expense of public amenities and neighbourhood quality in the coming years.

A flat of just 395 sq ft in gross floor area in City One, in Sha Tin, an old private estate, has just sold forHK$5.85 million. Thanks to our Faustian bargain, anyone who owns a flat is likely to be a multimillionaire. If economics is all about trade-offs, you are rewarded with capital gain on your property in Hong Kong, not improved quality of home life.

〈China Daily, April 7, 2018〉Global investment bank Goldman Sachs is set to move out of The Center, a 73-storey tower in the city's Central district that sold for a record HK$40.2 billion last year. The bank will head for a lower-cost location in the Causeway Bay area after its lease expires in December, according to several people familiar with the matter.

The bank, the first top tenant to leave the building after the sale, may be able to cut its rental bill by up to 29 per cent in the move to Hysan Development's newly completed Lee Garden Three, according to industry analysts.

"Due to limited supply, there is room for The Center to raise rents. When the new owner comes in, they have to raise rents when they renew leases with tenants," said Thomas Lam of Knight Frank.

Goldman would not be the first to reduce its presence in the Central area, where office rents are soaring. Already the most expensive city in the world to rent commercial space, Hong Kong's offices are being snapped up by mainland firms that are willing to pay for a Central location.

Last year BNP Paribas left the district for a cheaper building in Quarry Bay on the opposite end of Hong Kong Island. Goldman will, however, retain its office in the Cheung Kong Center in Central.

"Supply pressure is mounting, particularly in Central, with the vacancy rate dropping to 1.1 per cent, a new low since the third quarter of 2015," said Marcos Chan, CBRE head of research for Hong Kong, southern China and Taiwan. "We believe the continuous strong demand and low supply could potentially push up Central rents by a further 5 per cent this year."

Goldman would also escape the uncertainty that surrounds the new owners' plans for The Center, according to James Mak, district sales director at property broker Midland Commercial.

"There are a lot of investors and their plan for the building is not yet clear. They might divide some floors into small units and sell them, an arrangement that is not good news for financial institutions, which guard their high-end images," Mak said.

〈Macau Daily, April 6, 2018〉Andrea Tan Singapore private home prices surged the most since 2010 as the property market staged a recovery from a four- year slump.

An index tracking private residential prices jumped 3.1 percent in the three months ended March 31, according to a flash estimate from the Urban Redevelopment Authority, building on a 0.8 percent gain the previous quarter. That’s the biggest quarter-on-quarter gain since the three months ended June 2010.

Home prices have rebounded in the past three quarters, prompting aggressive land bids from developers as the property market shrugged off cooling measures ranging from additional taxes to limits on loans. The government in February raised taxes on home purchases exceeding SGD1 million (USD764,000) as the collective apartment sales market reached levels described as exuberant by the central bank.

“There’s no denial we’re entering an escalating market in light of higher land prices,” said Desmond Sim, head of research for Singapore and Southeast Asia at CBRE, who had forecast a 5 percent to 6 percent increase in home prices for 2018.

Share prices of the city’s largest real estate developers led gains on the benchmark Straits Times Index. City Developments Ltd., controlled by billionaire Kwek Leng Beng, climbed 1.5 percent to SGD13.20, the highest in more than a week. CapitaLand Ltd., Southeast Asia’s biggest developer, rose 1.4 percent to SGD3.62, the most since March 6.

Singapore’s so-called core central region drove the price increase, where housing values climbed 5 percent in the area that includes prime residential districts. That’s pushed by a handful of developments such as GuocoLand Ltd.’s Martin Modern, according to CBRE.

〈China Post, April 5, 2018〉The biggest names in Macao’s gaming business are pulling out all the stops in the enclave’s push to recast its image to become one of the region’s top resort-and-entertainment hubs with an eye on the mass consumer market.

The rejig has been well coordinated with a dramatic rebound in the casino mecca’s fortunes following one of the chilliest “winters” on record sparked by a massive crackdown on graft on the Chinese mainland that had kept high rollers at bay.

Macao’s bid to diversify itself has also been given greater relevance as regional competitors, notably Vietnam, South Korea and the Philippines, up the stakes with the opening of a string of plush casino resorts in the past few years, with more on the cards.

MGM Resorts China — one of the six licensed casino operators in Macao and a joint venture between MGM Resorts International and Pansy Ho Chiu-king — threw open the doors of its resplendent $3.4-billion MGM Cotai casino resort earlier this year, joining the ranks of the group’s flagship MGM Macau (formerly MGM Grand Macau) that has been operating in the peninsula area of Macau since 2007.

MGM Cotai’s launch adds another spark to the escalating tug-of-war along the Cotai Strip — Macao’s answer to the famed Las Vegas Strip — offering non-gaming themed attractions to lure more mass-market consumers rather than hard-core baccarat or poker enthusiasts.

Cotai currently boasts some 10 major hotel-and-casino resorts, including the iconic Venetian Macao — the largest casino in the world and one of the earliest settlers on the Cotai Strip — Sands Cotai Central, both run by Sands China; Wynn Palace Cotai operated by Wynn Resorts; the Parisian Macao owned by Las Vegas Sands and newcomer MGM Cotai.

〈Asian Post, April 4, 2018〉Mark Tang, a Hongkonger who has been living in Shenzhen for 10 years, has to defer his plan to move back to the city even though his wife is about to deliver a baby in September.

The businessman, who moved across the border after retiring in his early 40s, bought a 1,670 sq ft flat for 3 million yuan (HK$3.7 million) three years ago in Shenzhen's southern Liantang district, which is a one-hour bus ride away from Kowloon Tong.

Tang had wanted to return to Hong Kong after his wife got pregnant as he was eager to educate his child in the city.

But his plan was in doubt after he saw home prices soar, placing the city among the least affordable metropolitan areas in the world to live in.

"Now, I could sell the flat in Shenzhen for about 5 million yuan, which can be used to buy a new flat of about 300 sq ft in Hong Kong," Tang said. "Shall I go and downsize in Hong Kong? It would be stupid to act now."

For the same price, buyers can get a new flat of about 255 sq ft, the equivalent of two car parks, in Henderson Land Development's South Walk Aura in Aberdeen, which translates to about HK$24,350 per square foot.

"Many of my friends face the same situation. Their children have to cross the mainland border to attend schools in Hong Kong every day. Some of these kids are already 10 years old and their parents still cannot afford to return to Hong Kong," Tang said.

Tang would only consider buying a home in Hong Kong if prices fell."Nothing will keep rising forever, and not fall," he said.

The phenomenon of Hongkongers moving to Shenzhen is not new. Back in 2009, the southern metropolis had a population of 61,900 Hongkongers, according to official data.

And now, soaring flat prices in Hong Kong are deterring many of them from returning home.Now, I could sell the apartment in Shenzhen for about 5 million yuan, which can be used to buy a new apartment of about 300 sq ft in Hong Kong. Shall I go and downsize in Hong Kong? It would be stupid to act nowMark Tang, Hongkonger living in ShenzhenIn February, for the first time, the price per square foot at 50 major housing estates in Hong Kong exceeded HK$10,000.