Random Reflections on the Hong Kong Property Market - PowerPoint PPT Presentation

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  1. Random Reflections on the Hong Kong Property Market Nicholas Brooke Chairman 22nd March 2005 Professional Property ServicesLimited

  2. Menu • Outlook for the property market • Chasing the tourism dollar • Funding of cultural and heritage initiatives • Health warnings

  3. A More Predictable Property Market? • Shift from trading to investment mentality • More comprehensive long term approach to planning and land use • Land supply driven policy • Influence of Government • Re-think of housing policy • Market largely driven by fundamentals • But – Beware of euphoric forecasts

  4. Influence of Government • Leasehold land tenure system • Principal generator of land supply • Disposals – application list system • Lease modifications • Agencies – URA / MTRC / KCRC • Dependence on land revenues • Major owner and until recently provider of social housing

  5. Market Overview –Residential • Ultimate barometer of Hong Kong’s well being • In recovery mode but is it sustainable? • Three markets within a market • Potential issues relating to supply in 2006-2007 • Vulnerability to increases in interest rates • Speculation at top end

  6. Total Stock of Private Residential Units by Class in Hong Kong Class D (53,646 units) Class E (24,112 units) Class C (110,624 units) Class A (361,243)units) Class B (501,137 units) Classification of Residential Units by Class : Class A - saleable area less than 40m² Class B - saleable area of 40m² to 69.9m² Class C - saleable area of 70m² to 99.9m² Class D - saleable area of 100m² to 159.9m² Class E - saleable area of 160m² and above Sources: Rating and Valuation Department

  7. Hong Kong Residential Market (Overall) Supply, Take-up & Vacancy Sources: Rating and Valuation Department, HKSAR & PPS

  8. Hong Kong Residential Market Annual Price Indices (1999 = 100) Sources: Rating and Valuation Department, HKSAR & PPS

  9. Hong Kong Residential Market Annual Rental Indices (1999 = 100) Sources: Rating and Valuation Department, HKSAR & PPS

  10. The Leighton Hill, Happy Valley

  11. Tin Shui Wai, Yuen Long

  12. The State of the Commercial Markets • Strengthening occupational market • Disconnect between occupational demand and investment appetite • Inflexibility of existing supply • Future of CBD? • “City” approach to the attraction of major space users

  13. Supply, Demand & Vacancy in Prime Areas New Supply & Take-up (net sq ft) Vacancy Rate (%) * As of September 04 Source : CB Richard Ellis Limited

  14. Key Ingredients of a World Class City • Diversity • Education • Employment • Quality of life

  15. Chasing the Tourism Dollar • National/city approach to creating world class tourist destinations • Development of family tourism – Disneyland and Ocean Park • Legalisation and growth of gaming • Emergence of Macau as the Las Vegas of Asia

  16. Disneyland

  17. Ocean Park

  18. Lack of Overall Conservation Policy • Both built and natural heritage require protection • Often piecemeal approach with no overall responsibility or policy • Lack of “not-for-profit” culture or “lifestyle capital” mentality • Need for more sustainable model if we are to retain what is left of our heritage assets

  19. Muddled Approach to Cultural Activities • Absence of holistic approach • Entrustment but to whom? • Why just a single cluster? • Lack of community involvement in conceptual thinking • Assumption that if you build, they will come

  20. Premium/Return Driven Approach • Presumption that property developers are only solution to conservation and cultural initiatives • Results in less than optimum solutions as developer is bottom line driven • Present assessment criteria means strong financial bid will always win • New mind-set required – sites should not be “sold” – they are public assets

  21. West Kowloon – Aerial View

  22. West Kowloon – Conceptual Proposal

  23. Former Marine Police Headquarters • a heritage hotel with food and beverages outlets and retail facilities for completion in 2007 Source : Flying Snow Limited

  24. The Magistracy

  25. CPS Barrack Block

  26. Health Warnings (I) • Continued Government involvement • Lack of meaningful institutional investor pool • Trading mentality still prevails • Lack of sophisticated asset management expertise • Failure to resolve long term policy/strategy issues • Heritage • Sustainability • Urban Renewal

  27. Health Warnings (II) • Absence of successful public and private partnership model • Potential volatility of supply • Lack of joined up thinking • Need for strategic planning • No account yet taken of intangible returns

  28. Thank You!

  29. Professional Property Services Limited