Hong Kong property!

Simon, you are right, the HK market can be very cyclical. This is indeed a feature I look at in many assets in invest in. (Hence my current strong buy views on Gold Coast property in QLD). They key of course is assessing where we are in terms of value, and ensure you buy at the beginning of a cycle.

As for HK "being at the peak", yes you are to some extent correct - the view from various "analysis" over the last year or so was that HK had peaked and that there was possible downside.

Now, if you follow HK media and sentiment, the view seems to be the next 12 months has significant upside. Chinese buyers are back in a big way, and HK locals are also buying back in. In fact my feeling is that HK is gathering pace towards another buying frenzy period.

Based on my own valuation metrics, HK is significantly undervalued and has significant upside.

I must disagree on HK laws being favoring tenants. HK is one of the freest markets in the world, and contract terms prevail. In Australia, laws favour tenants. Not so in HK at all. The landlord in HK is king, and the terms of the lease are whatever you negotiate. A typical HK lease is very pro-landlord.

 

Yeh there are heaps of stories about 'Hell tenants' in HK. That they don't pay rent and no one can do anything about it.

I'm listening to SPI podcast at work at the moment and you are in the podcast. It's great.

 

very attractive tax rate, and no CG/ST/LT.... l like this

 

Just reading some of the posts in this thread, if you are looking at booming/rising markets for opportunities USA is full steam ahead in recovery mode and there are many opportunities, but like everything requires lots of homework.

I would rather be buying in a market that is already moving than buying in a market using guess work just my opinion.

MTR

 

I should start asking my relos and friends questions re HK real estate. It's a fascinating place I must say but I seem to have allergy to HK weather and food. Badly sick on every single trip.

 

I love HK, its a great place to shop and holiday but to live... no thanks

 

You may be referring to people who claim title due to adverse possession and continuous occupation after 12 years. This exists in Oz too.

But for a normal tenancy is very easy to remove a non-paying tenant. In all my years of buying in and out of hk market I never once have had a issue with any tenant. Depends on the type of property you buy perhaps. I tend to go for property that appeals to professional expats.

Perhaps the only issue I had was once when I bought a place that had an exisiting tenant who baulked my proposed rental increase on renewal. He was on a super low rent so clearly wanted to fight to stay. Police were called, lawyers letters sent and in the end I have him a month free rent in return for him to agree to move. All good.

 

Me too!. (There is actually a quarterly "land tax" called "govt rates" but it's really nominal).

Yes I love the absence of capital gains tax. You keep any profit you get so flipping is much more common. Also agents commission is 1% standard and in HK like most things is negotiable. I usually push for half a percent commission.

 

Yes y

You are right, depends on area and also the tenant is through real estate agent In general if they are not paying rent for 15days can report to the government already and after 3 to 4months they will action. There's also insurance to protect against hell tenants.
I've been thinking about buying in Hong Kong too if I don't buy it now when I retire here and relocate to Hong Kong... It will be way too expensive. You know the house price in Hong Kong they grow so quickly...

 

Yes long term HK will still go up a lot more.

I won't retire there personally but do love visiting.

 

don't pay stamp duty or capital gains in New Zealand'
Same in USA no stamp duty, however with capital gains you need to use proceeds of sales for another investment property, still pretty damn good, and tax lower than Australia.
ATO wants a bite at each end unfortunately, not brilliant for property investors.

 

I wish they dropped the cgt in oz.

 

Sadly there is Stamp Duty in HK !
But yes it is great in NZ
If my last purchase was made in Oz instead of NZ it would have cost me another $1m in stamp duty and land tax ...in the first year alone!

 

What is a typical rental yield for HK property? Cashflow + due to low interest rate?

 

Yields are around 3% for the stuff I buy. Would be lower for higher end lux (ie 2%) and higher for some older low end places.

But yes very much cash flow positive. My loans are all less than 1% pa (albeit variable). So still significantly cheaper to buy than to rent which is a key variable I look at.

The 24m $ question is of course the outlook on interest rates, which are increasingly looking benign, hence the sudden ramp up in hk prices just underway.

 

I purchased on a 3.3pc net yield
Probably 2.7 to 3.0 pc net yield on a new purchase today

 

The interest rate you are paying is pretty good as my deposits in HK are receiving 1.2pc
My $64,000 question is which way the $US is going
(I not as rich as Mr Big so my question is $64k not $34m lol )

 

Works out well if mortgage isn't really part of the equation otherwise the LVR will scare most people away - 40% for non-HK derived income.