Sunday, January 30, 2005

Hong Kong estate market funded by U.S Investors

Large U.S funds are investing in Hong Kong estate market to enjoy the higher return on the expectation of economic growth in China, instead of speculating on the currency, according to NY times.

George Soros, one of the wealthiest "fund managers" and the guy who are famous at speculation of the currency told the reporters at the World Economic Forum that the deflation in China is not bad because " the people got the goods cheaper"

Were all they said true or not? Hmmm, it remains to say. The Hong Kong estate market has already boomed too enough for the common people to buy the house themselves. The employee's salary grow much slower than the growing of the estate price. I am not a estate expert, but what I could see is that many local friends can't afford to buy houses themselves. I think it is simple to know the market from the supply and the demand. Soros may be right that the deflation in China is good for people to buy goods, but it is not the enough reason for the fund managers not to speculate, including Soros himself.

The ING fund(One of the largest funds in U.S) manager said that he consider Sun Kung Kai as one of the best estate companies in Hong Kong. He thought the stock was trading at a 10 percent discount to the value of the properties owned by the company. What I want to know is that if he lost money in the failure of investing in HK Reits several weeks before.


無塵工作室 said...
This comment has been removed by a blog administrator.
無塵工作室 said...

I've deleted my 1st comment because there was a mistake, please forgive me.

That notion(Estate market funded by US investors) sounded half reasonable to me, because depreciation of the dollar meant that assets held in the US of in US$ also decreased in value, to save this most investors will move their money somewhere else, for example Europe (where currency is strong at the moment) or HK (undergoing economic recovery)...or course there are many other places as well.

Property prices had always been expensive, but what defines a property as 'expensive'? I think it depends on what you compare it with. My flat is cheap compared with other properties in the same area, but it's still not cheap, by middle class standard. I think it also depends on what you do with the property as well - for investment, the market is still underpriced (esp. some 2nd hand market); but for living, it will always be expensive.

As you've said, demand isn't that great in HK right now, which is the reason why banks are offering VERY long term mortgages and similar products (something like 60 years, I've read from newspaper, please tell me if I am wrong on this).

Everyone said that they're poor, but the truth is that the mass of HK now has diposable income (x-mas spending was strong, you can tell from walking around), but still not enough for any investment yet. That would have to wait I think.

Amy or koala said...

Yes, I agree with that the banks are providing more attratable loans to the common people to buy the houses. When I did my intern in a newspaper, I interviewed some bankers, when their bank extended the limitation on the combined age of the property and locan tenor from 40 to 60 years.
But what I was worried is that it is easy to form the bubble when investers are the major force in the property market. Beijing is one of the examples and Shanghai will be later. The result may serious or not depending on the size of the bubble, but the comsumers will suffer from it anyway.

無塵工作室 said...

very worrying indeed!

Which was part of the reason I think the RMB rates must not rise for the moment, because of inflation worries and the bubbles inside the mainland...