Rich Chinese Offloading HK Flats

Some Chinese owners are selling their flats in Mid-Levels

Not only are locals and expats offloading their properties to leave the city, but also mainland Chinese who need to cover their stock market losses.

About 10 to 20 percent of mainland homeowners in Mid-Levels have reduced their prices because they are in urgent need of funds or are shedding their holdings, said Samuel Lai, senior direct sales director at Midland Realty.

"Homeowners in urgent need of money may cash in for having burnt their fingers in the stock market," said Lai, who anticipates another 5 to 8 percent will lower their asking prices until the pandemic and stock market volatility ease.

One buyer is offloading his flat at The Morgan

However, who is willing to buy now? Prices could go down even further in the coming months, and these transactions may take a few months to be completed. Perhaps even worse, the current fifth wave has made potential buyers anxious about even viewing the flats, thus further stalling the property market.

Hong Kong's stock market has been a rollercoaster ride in the past two weeks with mainland Chinese tech stocks taking a serious beating, and on top of it the war in Ukraine and the rise in Covid-19 cases in China causing jitters.

Property owners in Mid-Levels have cut prices by up to 15 percent since Lunar New Year because of the aggravating factors, said Lai, adding that prices may fall further by another 5 percent until midyear.

Sun Hongbing is the younger brother of mainland Chinese developer Sunac China Holdings' chairman, who sold three luxury flats at The Morgan and Arezzo in West Mid-Levels at a loss of a whopping HK$126 million (US$16.10 million) this year.

Another flat is at Arezzo on Seymour Road

He sold the 2,343 sq ft flat with a 460 sq ft rooftop at The Morgan for HK$138 million, 27 percent lower than the HK$189 million he bought it for in October 2018. The overall loss totalled HK$109 million, the biggest loss since the coronavirus pandemic erupted two years ago, if the 30 percent stamp duty is taken into account.

The creditors of another Chinese tycoon from Zhejiang province put two foreclosed duplex flats and two parking spaces at Marinella in Wong Chuk Hang for sale at HK$283 million. 

Looks like things are financially tight for everyone...

Monday News Bites

National security police arrested Wong this morning

 

Monday morning and more arrests today -- three students of an opposition group called Student Politicism who national security police allege the trio conspired to incite subversion against state power.

Officers carted off books, masks and chocolates

The group is also known for holding fundraisers to buy basic necessities for prisoners, such as surgical masks, sanitizers, snacks and books.

After the trio were arrested, officers broke into the warehouse where Student Politicism store their supplies and these were carted away as evidence.

These students, ranging in age from 18 to 20 years old, and were doing something similar to Wall-fare, in providing sanctioned supplies to inmates. They have been in trouble with the law before and arrested a few times.

One of them, Wong Yat-chin, 20, convenor of Student Politicism, previously said in an interview the value of the group was "to test the red line of the authorities".

They definitely touched the red line today.

How long does it take to count 4,380 ballots?

Media that are not pro-Beijing remarked this morning how it could be possible to take almost 14 hours to count 4,380 votes in yesterday's election for the Election Committee.

Despite the lengthy delay, Beijing's liaison office hailed the exercise as marking a "major step in Hong Kong's democratic movement with its own characteristics".

Definitely, when only 0.06 percent of the population is involved. 

Tung is the owner of a flat at Grenville House

 

Finally a news item from last week -- former Hong Kong chief executive Tung Chee-hwa is a first-time homeowner at the age of 84. Guess there's always a first time for everything.

Unlike most people who have to scrimp and save or hope parents will pitch in for the down payment for a microflat, Tung shelled out HK$160 million (US$20.6 million) for a luxury flat at Grenville House in Mid-Levels.

As Tung paid for it himself, he was subjected to a stamp duty of 4.25 percent, or HK$6.8 million.

Tung is a first-time homeowner at 84 years old

"Tung bought the C2 unit of Grenville House in August this year. The government had rented the same unit during his stint as chief executive," his spokesperson said. 

"After resigning as chief executive, he continued to rent the unit for his own use. He learnt in recent months that the vendor had intentions to sell his property, leading to his decision to purchase the unit at Grenville House."

He had been renting the 3,335 sq ft flat for more than a decade, and it comes with a car park.

It's just really baffling that Tung has never bought a home in Hong Kong before until now.

And by the way the vendor is laughing all the way to the bank. It bought the property for HK$3.9 million in 1982.

The Privilege of Parking

Can you imagine paying over HK$5 million to be able to park your car?

A Hong Kong executive has paid a world record HK$5.18 million (US$664,260) for a parking spot in Sai Ying Pun.

Kwan Wai-ming is the executive director of Huarong Investment Stock Corp and needed a third parking spot in The Upton, a new mixed business and residential complex.

The last record price for a parking spot was HK$4.8 million at 55 Conduit Road in Mid-Levels last October.

The price beat the record at 55 Conduit Road at HK$4.8M

In this case, Kwan probably lives at The Upton, having forked over HK$75.6 million in 2014 and 2016 for two units in the building, and then last January he bought two parking spaces at HK$3.78 million and HK$3.98 million.

To put this into perspective for ordinary folk, there's a parking garage across from The Upton where it costs HK$3,000 to rent a parking spot there.

But Kwan is paying for the convenience and security of having his cars in the same building.

The rest of us would use HK$5.18 million to buy a flat to live in -- if given a chance.

Ah, the lifestyles of the rich and obnoxiously loaded...

Two Housing Extremes

Cullinan West at Nam Cheong station saw big sales of units today

More housing stories are in the news.

When you arrive at Kowloon Station and ascend the escalator to Elements mall, there's an army of property agents shoving brochures in your face, asking if you want to buy a flat.

No, I just want to have some dinner.

The show flat gives the aura of a sophisticated place to live in

The brochures are for a residential project called Cullinan West in nearby Nam Cheong station, and they average over HK$20,000 per square foot.

But that rate didn't deter a family today, where three members bought three four-bedroom flats each, with the total bill totaling a whopping HK$200 million.

Excuse me?

There is no further information on who these buyers were or how big the flats were, but who happens to have HK$200 million to spend like that?

And were they all first-time buyers so they avoided paying the extra stamp duty too?

Then there is the other extreme -- subdivided flats, not in seedy Sham Shui Po, but in the tony neighbourhood of Mid-Levels.

One flat here on Old Peak Road is subdivided into five units

Reporters posed as potential renters ad visited a 2,400 square foot flat on Old Peak Road that was subdivided into five units, ranging from 250 sq ft to 656 sq ft, and rents from HK$25,000 to HK$36,000 respectively.

Who pays HK$25,000 for 250 sq ft to rent?

Apparently the hefty price includes utility bills, and a maid coming in to clean up twice a week, bed sheets changed once a week and free wifi. There's also basic open kitchens with an induction stove top, kettle and coffee maker.

So now we have people hoarding flats with hundreds of millions of dollars on hand, and at the other end of the scale, expensive flats subdivided into smaller ones and charging exorbitant rents.

And the Hong Kong government says it's watching the situation closely and can intervene at any time?

Anytime now would be good...

Housing Worlds Apart

The luxury development Mount Nicholson on The Peak

Last Friday, the Hong Kong government made a surprise move when it raised the stamp duty on real estate for non first-time buyers to 15 percent in a bid to curb property prices.

But it seems buyers have found a way to circumvent the tax -- by putting their multiple flat purchases into one agreement.

It happened on Sunday when one man, considered a first-time buyer, purchased four flats at Met Bliss project in Ma On Shan for a total sum of HK$19.93 million.

Because all four units were put under one agreement, he was able to avoid paying HK$1.6 million in levies.

And then today two adjoining luxury flats on The Peak were sold for a whopping HK$912 million, or HK$104,803 per square foot, making it the most expensive price for a flat in Asia.

The deal is for two flats at Mount Nicholson for a total area of 8,702 square feet and includes three parking spaces.

Entrepreneur Sandy Wong rents out capsules in Hong Kong

The selling price beats out the previous record set in 2015 by 39 Conduit Road in Mid-Levels for HK$103,762 per sq ft.

"Rich families are most concerned about the prestigious location and quality of the project, not the stamp duty," says Thomas Lam, head of valuation and consultancy at Knight Frank.

"Investors buying small to medium-sized units will be hit hardest by the latest property tax, but not the richest [investors]," says Lam.

Of course. Stamp duty to them is part of the cost of buying the property in the first place.

But these people are living on another planet compared to the rest of us, some of who are perpetually saving because real estate prices keep going up and salaries are not keeping up with inflation.

Or perhaps you should give up dreams of trying to buy a flat and live the minimalist life in a capsule?

An enterprising man from Guangzhou has rented out flats where each person can rent a capsule space of only 2 metres long and 1.1 metres high, about 25 sq ft.

A government brownfield site in Wang Chau, Yuen Long

The monthly rent ranges from HK$2,800 to HK$4,500 depending on the location. All the occupants have to share the bathroom, kitchen and common area.

Sandy Wong says he has received a lot of inquiries, and many of the renters live far from their workplace, or maybe their home is being renovated, or they've had marital problems and need a space to live in temporarily.

These "space capsule" homes are inspired by the Japanese capsule hotels, but those were for salaried men who missed the last train and just need a cheap and clean place to sleep in for the night. These are for renting monthly.

Is it me, or is the Hong Kong housing market completely out of hand now?

And yet the government doesn't want to do anything to disturb the rural strongmen who are occupying government land in the Wang Chau that could house some 13,000 people...

Fact of the Day: Park Your Car for HK$4.8M

Record sale earlier this week for a parking spot in Mid-Levels

I've been writing blog posts about how flats are getting more and more expensive and outrageously small, so tiny that they are only slightly larger than a parking space.

And now there is a brisk business to be had in buying and selling parking spaces.

The big deal of the week was for a 135 square-foot space at 55 Conduit Road in Mid-Levels for HK$4.8 million.

To put that into perspective, it's more expensive than a flat in Sha Tin north, where a 327 sq ft flat is HK$4.3 million. And you can live in it.

The parking lot entrance to 55 Conduit Road

Louis Chan managing director of Centaline Property Agency's residential department, explains the surge in prices.

"Residents at super luxury properties own more than one car," Chan said. "They have to buy an additional parking lot in the secondary market at higher prices."

There are 35 luxury flats at 55 Conduit Road, from 1,500 sq ft to 2,700 sq ft priced between HK$50 million and HK$360 million. So a parking spot here is chump change for the uber rich.

If this is not a sign of serious economic disparity, I don't know what is...

Fact of the Day: Hong Kong's Most Expensive Flat

One of the show flats at 39 Conduit Road oozes with luxury

The address 39 Conduit Road in Mid-Levels is filled with controversy.

Built by Henderson Land Development and launched in 2009, it was this project that made the government realize how developers have numerous tricks to market their properties to unsuspecting buyers.

The developer in this case claimed to have sold a five-bedroom duplex flat on the "68th floor" of a 46-storey building for HK$439 million (US$57 million), making it US$9,200 per square foot, setting the record for the most expensive apartment in the world.

The building is not without controversy dating back to 2009

How could a building that had 46 floors have a flat on the 68th floor? It just made up the numbering because the Chinese don't like the number four. And it was also found "buyers" put in offers and somehow the deals were completed before the three-month completion period, and all but four transactions, including the record-setting sale, were later cancelled.

Henderson Land claimed the buyer of the record-breaking flat bought six units, while a newspaper reported from an unnamed source that all 24 flats were bought by one buyer through a shell company.

It was just a way to hype the property -- but to the extreme.

Severe criticism pushed the government to set better guidelines on how developers market flats, that they need to give more accurate information for buyers.

Us plebians can only dream of what it's like to live up here...

The building is back in the news today because the duplex on the 46th floor that is 5,732 square feet sold for HK$594.76 million, or HK$103,761 per square foot, the most expensive in Hong Kong and Asia. The duplex comes with a 1,754 square foot roof.

The deal was confirmed on December 24, though the original selling price was HK$646.48 million.

It now eclipses the latest sale at Opus Hong Kong that previously held the title of having the most expensive flats in Asia.

It's interesting Henderson Land is still able to sell the flats at 39 Conduit Road despite all the controversy -- and at record prices. Or maybe the uber rich don't care about these things...

Nostalgic Walk

Bringing up memories of Hong Kong by walking around Central

This evening I met up with a friend who was born and raised in Hong Kong, but has since lived abroad in the United States and is now based in Shanghai.

She is here for a short visit, and was very happy to have me take her around Central, reminding her of her old haunts.

When we met up at IFC mall, she was thrilled to have met up with four friends in one afternoon -- only made possible because of the convenience of Hong Kong.

I quickly showed her around one floor of the mall and she was very impressed by all the brand names and especially the Apple store, where there was a relatively small line of people keen on checking out the new Apple watch.

Then we headed out towards the Mid-Levels escalator, but not before seeing the Hang Seng Bank headquarters, where her father used to work.

As we walked through what used to be the Central wet market, she was immediately reminded of the time when she was a child and went with her housekeeper to the market where they bought all kinds of fresh ingredients.

My friend remembers horrified watching chickens being killed, and in particular a frog chopped in half, one half jumping forward, the other half jumping towards her. "I promised myself never to go back there again!" she said.

On the escalator she marvelled at the shops and restaurants along Shelley Street and was thrilled to see old establishments, like Mak's Noodles still around, and the Central Police Station that will be turned into a public space.

We walked along Staunton Street where she saw the bars and restaurants in action -- Tex-Mex, Nepalese, Italian, British... boutiques selling dresses and jewellery... and she wondered if people lived upstairs and I confirmed that was the case.

Just in time we made it to PMQ, Hong Kong's latest landmark that's about a year old. She wondered why the place wasn't as lively as Soho, but I explained PMQ needed more promotion, but also because it's more about giving a platform to young artists and entrepreneurs. The place is busier on the weekends, but more needs to be done to give these businesses a bigger boost in terms of exposure.

We had a lovely meal at Isono, the casual Spanish restaurant on the sixth floor, including a large salad, seafood paella, and a small plate of cured Iberico ham on the house.

Over dinner she told me about meeting a friend of hers she hasn't seen in 19 years, her first boss, and her next door neighbour when they were growing up, so it's been a very nostalgic trip for my friend.

She has done some errands in Hong Kong, like reactivating her bank card, but also renewing her return home permit -- as she still has one that's a beige passport-sized book and her black and white picture is from when she was in her early 20s!

I joked it was an antique, and she said even the staff at the bank thought her bank card from five years ago was a piece of history...

Ah young people!

After dinner we walked back to Central MTR. At Queen's Road Central she pointed to LHT Tower which houses Gap and Lupa, and asked if it was still Queen's Theatre. It wasn't I said, but celebrity chef Mario Batali has a restaurant here...

And next door at Melbourne Plaza was where her mother used to work for her uncle who had a business there.

So many memories conjured up in one evening!

London More Expensive than HK?

Somehow London has overtaken Hong Kong as the most expensive place...

According to real estate firm Savills, London is now more expensive to live in than Hong Kong.

How could that possibly be?

Real estate costs per employee to rent residential and office space in London are $121,000 a year, while Hong Kong is not far behind at $115,717, and New York at $107,782.

"I don't think it's desirable necessarily to be the most expensive city to occupy, but on the other hand, you probably wouldn't be the most expensive city if you weren't also the most desirable," commented Yolande Barnes, director of world research at Savills.

Property prices in Britain have risen 18.4 percent in the past year, Savills said, and office rents have climbed sharply.

Meanwhile the report says Hong Kong is seeing residential rents falling as well as a weakening currency that resulted in the city losing the top spot for the past five years.

"Prime residential values have been hit hardest as cooling measures take effect, while rents are sliding due to weakening demand from the corporate sector," the report said. "In office markets, finance-focused Hong Kong has suffered as firms downsize and consolidate."

While rents fell in Hong Kong in the first quarter this year, they have since picked up, with average rents at 50 major housing estates hitting a record high in August, says Ricacorp Properties.

Nevertheless, Hong Kong is still the most expensive city to buy residential property, which is priced 40 percent higher than London.

Just yesterday a friend told me that her colleague, a young man in his early 30s with his wife had to pay six months' rent (at HK$15,000 a month) in advance in order to lease a flat in Tuen Mun. Tuen Mun! Not Mid-Levels, but out in the New Territories.

He was told that if he didn't have the money up front, the flat would be rented to someone else.

So the young couple somehow cobbled together HK$90,000 cash so that they could have a roof over their heads. The young man is only a contract worker, and I'm assuming his wife has a permanent job. How did they pay tax on top of that?, I asked. My friend said it's better to have somewhere to live first, then worry about tax later...

She has a point.

But six months' rent in advance in Tuen Mun?

Perhaps Savills should revise its report again... while property prices for luxury flats may be coming down, it's a really tight financial squeeze for the middle class who are just trying to get by...