Buying in Hong Kong

[china]

Has anyone had any experience with property investment and purchases in Hong Kong?

Right now, the exchange rate is very favourable. 1 aussie dollar equals 8.3 Hk dollars. This gives an added protection to investing over there.

Furthermore, the property market seems to be quite volatile with swings of over 20% over half decades. This means that there is much more opportunities for gains (and losses) than australian property investment.

The final sweetener is that there is no capital gains tax in hong kong and foreigners are entitled to own property.

I would be interested to know if anyone has had experience in this area.

 

[geoffw]

While I have no knowledge of the HK market, any capital gains tax is applicable in Australia and not over there.

 

[Newbieatlife]

Has anyone had any experience with property investment and purchases in Hong Kong?

Right now, the exchange rate is very favourable. 1 aussie dollar equals 8.3 Hk dollars. This gives an added protection to investing over there.

Furthermore, the property market seems to be quite volatile with swings of over 20% over half decades. This means that there is much more opportunities for gains (and losses) than australian property investment.

The final sweetener is that there is no capital gains tax in hong kong and foreigners are entitled to own property.

I would be interested to know if anyone has had experience in this area.

hong kong is completely different to australia. You are right in terms of its massive fluctuations and at the moment, I believe hong kong has reached its peak so not a good time to buy - this may and will probably change completely in 6 months time...its that volatile. Other thing to remember is, hong kong government is much more swayed in protecting tenants (much much more so than Australia)....if anything happens to your property during the lease, it will take many months for you to go to court and most likely the verdict will be in favour of the tenant regardless of whats happened.

One last thing to note, investors in hong kong property pretty much only value brand new or near new apartments....there is very little market in "adding value" to older places like the culture here in aus

In a hot market, I have witnessed wealthy individuals from china buy apartments off the plan in hong kong with boxes, yes boxes of cash and sell again in 2 weeks earning 50 - 100k AUD profit. When the bubble inevitably pops, you will often see headlines of people jumping off buildings!

 

[shuggy]

I've recently been transferring money to HK with the intention of buying an apartment this year but not sure yet, i need to do more research. Some analysts are predicting prices to fall in the next 6-12mths. Yes the x-rate is very good at the moment with the HKD pegged to the USD but yields are poor, around 3%. HK is very segmented so you need to do your homework.

I've looked at apartments in Discovery Bay, thinking of renting to an ex-pat working for the airlines. Entry price for something within walking distance to the plaza and ferry is HK$2.5m with most between $3.5-4m but they are very small by Oz standards at 400-600 sq feet (37-55 m2). Prices in DB tend to hold their value and remain more stable than other areas in HK, i think because there's so many Gwailo's. The place is like the Truman show but no cars are allowed, everyone drives golf carts.

Kennedy Town on the island is close to Central but getting expensive with the new MTR station nearly finished. I also like Mong Kok and Sham Shui Po on Kowloon side although they're considered seedy areas.

 

[Melbournian]

mongkok - hmmm maybe rent an apartment to the triads

 

[shuggy]

^ i'm sure they can afford the rent

 

[Pianissimo]

There is extra stamp duty tax if yo sell the property within 24 months.

If u sell within 6 months, 15% tax on the selling price even u make a loss.

Selling within 6 to 12 months, 10 % tax; from 12 to 24 months, 5% tax.

 

[annmak]

There is extra stamp duty tax if yo sell the property within 24 months.

If u sell within 6 months, 15% tax on the selling price even u make a loss.

Selling within 6 to 12 months, 10 % tax; from 12 to 24 months, 5% tax.

You are right. Actually after the new legislation of extra stamp duty, the turn over rate of properties in Hong Kong has been greatly reduced and thus the price too. One of the major impetus of the rise of price in HK properties in the past was the possibility of very quick turnover. Many sold the property before the settlement date and gained a substantial profit. But with the new stamp duty legislation, the possibility of ripping great profit in a short time is very low.

Having said that, I agree that the exchange rate is a very favourable factor for buying property in HK right now. The market has been down for about 10% but is now picking up slowly. To be honest, it is very difficult to predict the market in HK - too many factors affecting it. To name a few, the China market, the government's public housing policy etc.

If you consider the Australian currency is exceptionally high now and won't rise any further, it's absolutely good to buy in HK now. But should the currency becomes even stronger when you cash in (ie sell the property), your profit will be cut (if there is any).

If you want to buy in Hong Kong, don't buy in areas like Mongkok or Shamshuipo. Always buy in 'good areas', blue chip estates in Hong Kong Island and if you can afford, buy luxury apartments along the MTR stations. Properties within more than 5 minutes walk to MTR stations are considered too 'inconvenient' and have a slower rise in value. This is very very different from Australia. Once I bought a property of very good quality in a quiet environment in 15 minutes walk from MTR. Other properties built at the same time in the same district but just up on top of the station rocketed in prices. As for mine, it crawled slowly and rose a bit during the high time.

One more point: unlike Australia, the rental property management service is not popular in HK. Most of the property agents just help lease out the property and the landlord has to take care of collecting rent and maintaining the property on their own.

 

[shuggy]

If you want to buy in Hong Kong, don't buy in areas like Mongkok or Shamshuipo. Always buy in 'good areas', blue chip estates in Hong Kong Island and if you can afford, buy luxury apartments along the MTR stations.

The place i probably buy in HK will most likely be my "PPOR" which i spend most of my time in as i'm getting sick of Thailand (though it's only ~3hrs from HK to BKK so still convenient). I like SSP and MK because it has lots of bars and cheap computer gear!

Great advice to always buy in "good areas", blue chip estates, luxury apartments etc. I dunno how long you've been away but the places you describe would be worth AU$3-5m as a minimum. I don't have that sort of money for my main residence and i'll be paying cash too. A friend recently put 2 side by side apartments together for AU$9m. I know one guy who sold his house in Stanley for HK$87m and it's pretty average but it IS a house which are rare in HK.

 

[annmak]

I have returned to and been living here for over 10 years now, witnessing its dramatic fall and rise. I wish I could be back to Australia for good but because of family reasons, I can't. I love Australia so much that I am still emotionally attached to it and always keep connected with it in one way or another.

If you are buying to live in and paying cash, it's a different story. In the long run, there is little chance for property in HK to fall in price.

You are right that SSP and MK have a lot of bars, entertainment facilities and cheap computer stuffs. While these areas are always fascinating to tourists in the short run, they are very old, crowded, noisy and polluted to live in. HK is very small and the transportation is super convenient. Unless you live in Discovery Bay or off shore island, it won't take you long to travel to SSP and MK from any where in the HK island or the Kowloon side. If you like bars and computer stuff, Wan Chai is a much better choice though more expensive. But it's worth. Quarry Bay and Tai Koo Shing are market indicators too. Buying there can never be wrong. They are not as expensive as you imagine. If you buy an apartment about 1200 sq feet, it is around HKD 14 to 15 M depending on its levels. Should you know Chinese, you can go to the following website to check the settlement records and current ads for various areas in HK:

http://www9.property.hk/asktran.php

 

[shuggy]

Thanks for the info annmak, i'll have a look at the link when i get back next month and have a Honky with me who can help translate. 我不能读或讲中文
You seem to know the market quite well.. can i ask which areas you'd consider buying in with a budget of HKD 2.5-3m thanks.

 

[annmak]

Shuddy

At this moment, you can buy near to nothing good with 2.5 - 3m HKD. That's why the young people here are so anguish with the government. Even for a small apartment (about 500 sq feet) in average areas costs over 4 m.

I think you need to think very carefully about buying a property in HK now particularly if you are going to pay cash. Are you ready to lock up your cash in the property for at least two years? If you put them in bank in Australian dollars, the interest you get will be much higher than the return from rent and more importantly, much safer.

If you want it to be your PPOR, you'd better rent first until you are sure that the area is good for you and wait for the market to do down. The house price now is still unreasonably high. People find no reason to sell cheap - the keeping cost is not high as the mortgage interest rate is very low here in HK. Unless the interest rate goes up, the chance for you to get an apartment under 3m is very slim - or unless you really buy those old and poorly maintained, badly managed flats in MK and SSP.

 

[shuggy]

Shuddy

At this moment, you can buy near to nothing good with 2.5 - 3m HKD. That's why the young people here are so anguish with the government. Even for a small apartment (about 500 sq feet) in average areas costs over 4 m.

My name's shuggy; shuddy is my evil twin brother who i'm estranged from
The young people have much to be anguished about.. I can imagine the gen Y kids in Oz who are on a higher income wouldn't be happy paying over AUD 500k for a 46m2 apartment in an average area.

Not fair

I think you need to think very carefully about buying a property in HK now particularly if you are going to pay cash. Are you ready to lock up your cash in the property for at least two years?

Yes i'm prepared to stay in HK for more than 2yrs and keep money locked in HK property especially if i continue getting a good x-rate on the funds i'm remitting from Oz to my HSBC acc. I'm also looking at applying for permanent residency and getting an ID card so plan to be in the East long term.

If you put them in bank in Australian dollars, the interest you get will be much higher than the return from rent and more importantly, much safer.

I'm currently a non resident for tax purposes which means i've lost my tax free threshold and pay 29% instead of 15% on the first AUD 37k of income earnt. Instead of getting paid ~5-6% bank interest which i get heavily taxed on, i'd prefer to transfer the money out of OZ and take advantage of the "strong" AUD to buy assets pegged to the USD. Similar to what some people are doing with buying property in the US.

If you want it to be your PPOR, you'd better rent first until you are sure that the area is good for you and wait for the market to do down. The house price now is still unreasonably high. People find no reason to sell cheap - the keeping cost is not high as the mortgage interest rate is very low here in HK. Unless the interest rate goes up, the chance for you to get an apartment under 3m is very slim - or unless you really buy those old and poorly maintained, badly managed flats in MK and SSP.

Yes interest rates are very low in HK and sellers don't like to negotiate much. I'm happy with an older style apartment i can renovate in a well maintained building which has everything on it's doorstep

 

[annmak]

I think buying property NOW in the US is much better than buying in HK for people who don't know Chinese:
1. its currency is weak
2. its market is low
3. its environment is much more similar to that of Australia
4. its English -speaking -easier for you to do research and analyse the market.

This is said without any reference to limitations set by legislation of the US. I have no idea of the legal side.

 

[shuggy]

Good points. You've just convinced me to buy a property in America instead of Hong Kong.

 

[annmak]

Hi Shuggy, pls say Hi for me to your twin brother shuddy

Obviously you love HK and know a lot about it. BTW, I think you may already know that deposit interest in HK is not subject to tax. You are wise to park your money here.

No matter how much you love HK, the golden rule is: rent first! The landlords are actually subsidizing you!

Good luck!

 

[Deltaberry]

Landlords subsidising their tenants? I'm certainly not doing that in my HK apartments. The intest rate in HK is low enough that renting is typically more expensive than owning (excluding mortgage repayments). The housing policy dilemma in HK is that:

a) Renting is more expensive than owning; but
b) The deposit (ie 30% downpayment minimum) required to own is too high that most young people (ie under 35) can't afford to pay the deposit

--> so they end up renting unaffordable places when owning would've been a far cheaper option (but for deposit payments). Most people who get married really really struggle to move out on a lousy HK$30k/month dual income and I know several people in that boat.

Places like 愉景灣 are not bad - but they are not the growth corridors and are pretty random. If you want to play bay areas, you might as well 炒豪宅 and aim for the likes of 宝马山 or anywhere in 东半山 if you can't afford 西半山. Otherwise you'd play growth areas and look for where the next major redevelopment/transport hub is or where major companies are relocating to. 九龙站 was a classic example. Kennedy Town is also a way better play. I notice most of you only focus on very key areas on HK side - assuming you're all expats? There's lots of growth happenning out in residential areas on the green and light blue MTR lines (for want of better way to identification) and these could outperform HK island in the next few years if the market remains as subdued as it is now.

The comment about 旺角 and 深水埗 is interesting. If you said the same thing about western suburbs in Sydney or Melbourne in this thread, you'd be viciously attacked by many forumites.

Re taxes, if you're Australian you have to pay Australian capital gains taxes eventually unless you permanently gtfo of here. Only way to avoid the tax. That's why they're called the Australian Thieves' Organisation.

Finally closing comments. Whether you play HK or US depends on where you have familiarity. As many in this forum always say, there's always ways to make money regardless of what type of market you're in. If you know US better than HK, you should play US. If you've never been there in your life and don't plan to go there any more than once to buy your property, then who knows, maybe HK is a better choice. I personally choose HK because I know the place as well as I'd know Melb but that's just me and I go back every 4 months or so. The last time I went to USA was around 10 years ago.

 

[shuggy]

Right now, the exchange rate is very favourable. 1 aussie dollar equals 8.3 Hk dollars. This gives an added protection to investing over there.

Today i got 8.3528

 

[shuggy]

Hi Shuggy, pls say Hi for me to your twin brother shuddy

Obviously you love HK and know a lot about it. BTW, I think you may already know that deposit interest in HK is not subject to tax. You are wise to park your money here.

No matter how much you love HK, the golden rule is: rent first! The landlords are actually subsidizing you!

Good luck!

Thanks annmak, i'll let you know how it goes.

 

[china]

capital gains tax

While I have no knowledge of the HK market, any capital gains tax is applicable in Australia and not over there.

This is not true if you keep your funds in Hong Kong. Anyone is allowed to open bank account in Hong Kong, you do not have to be a resident or citizen there.