HONG KONG - SHOPPING MECCA
Cheap and cheery: Japan's Fast Retailing last month opened a 37,500 square foot Uniqlo store in the iconic Causeway Bay, which overtook New York's Fifth Avenue as the world's most expensive retail location. -PHOTO: REUTERS
[HONG KONG] Armed with empty suitcases and same-day return tickets, an army of mainland Chinese is descending on suburban outlet shopping malls and international fashion chains in Hong Kong, turning cheap into the new chic as luxury falls out of favour.
Wealthy Chinese used to stop over in Hong Kong for a few days to pick up a Louis Vuitton bag or a wristwatch for up to 40 per cent less than in Beijing or Shanghai.
These well-heeled tourists have now been overtaken by bargain-hunters that stay for a few hours, spend more at shops like Inditex SA's Zara and malls such as Citygate Outlets, turning Hong Kong into a must-be location for retailers who are braving some of the world's most expensive commercial rents.
"There are more mainland consumers than locals," said Tsz Chung, a salesman at a Nike Inc store in Citygate, located in the satellite town of Tung Chung near the airport. "Typically, mainland consumers look for cheap goods." Foreign retailers treat Hong Kong as a gateway to China, which is poised to become the world's biggest consumer market in three years, and how mainland tourists shop is big business. Sluggish sales growth in Europe and the United States also makes China, with its rapidly expanding middle class and rising incomes, especially attractive.
- http://www.businesstimes.com.sg/premium/china/chinese-turn-cheap-chic-shopping-hk-20130521
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According to a recent South China Morning Post report, property consulting firm Jones Lang LaSalle has downgraded its prediction for this year’s Hong Kong’s luxury apartment rent increase rate from 4 percent to 2 percent, with the slowing global economy a possible factor in decreased demand.
The consultancy’s adjustment came after luxury rents dropped in the first quarter by 1.2 percent (quarter on quarter). However, the firm projects mass-market apartment rents to have a much higher rate of increase with a range of 5 to 10 percent.
The numbers have been spurred in part by cuts to housing allowances for expatriates as a result of an economic slowdown. Residents’ subsequent downgrades from luxury to more mid-range options are expected to contribute to the higher rate for the latter market.
Over the years, the Hong Kong government has implemented several measures to cool its housing market. In October, it doubled the sales tax on high-end luxury apartments for non-permanent residents to stave off fears of a housing bubble, and its efforts appear to have finally started having an effect on housing prices.
Mainland Chinese buyers have been blamed in the past for driving up property prices, reportedly accounting for the sale of 25 to 40 percent of new luxury apartments in Hong Kong. The mainland government’s efforts to curb the purchase of multiple homes has encouraged more buying in Hong Kong, which may have been a factor in the Hong Kong government’s new policies.
http://www.jingdaily.com/rent-increase-rate-for-hong-kong-luxury-apartments-set-to-slow/25617/
REAL ESTATE
- HSBC REPORT ON LUXURY
PEAK HOTEL
REAL ESTATE
STAMP DUTY CHOKING SALES
Increased investment cost has deterred buyers of commercial property, and owners reluctant to cut prices while they enjoy good rental returns
One Bay East
Commercial property deals in the city fell sharply over the past three months as short-term investors shied away after the doubling of stamp duty on the purchase of both residential and non-residential properties.
"Buyers held off in the hope that vendors would cut their asking prices to compensate for the increased investment cost caused by the doubled stamp duty," the executive director of Asia investment services at agency Colliers International, Antonio Wu, said.
"But vendors were reluctant to cut the prices as they are still enjoying high rental yields."
The outcome of the impasse was an inactive investment market, and data from the research department at commercial real estate agency Midland IC&I, show just 20 en-bloc industrial and office buildings were sold in the first four months of the year, down almost half on the same period in 2012. The value of sales achieved dropped 23.6 per cent from HK$17.4 billion to HK$13.3 billion during the same period.
A Midland IC&I director for the office market, Eric Ong, said he expected the number of en-bloc sales this year would be below the 113 deals recorded last year. "Acquisition costs of buying an en-bloc building are now higher since buyers need to pay a large amount for stamp duties under the new rule," he said.
The largest en-bloc transaction for a building so far this year was the sale by Wheelock Properties of its new office tower, the West Tower at One Bay East in Kwun Tong, for HK$4.5 billion last month. Manulife International bought the building for its own use.
In the industrial market, sales are down 80 per cent since the government announced a number of measures, including a doubled stamp duty on property purchases, on February 22, though prices were down more modestly by 5 to 8 per cent, according to the director of Midland IC&I's industrial department, Alvan Chan.
"Short-term investors have been forced out of the market, leaving just end-users and long-term investors. And market sentiment has not improved in recent months," Chan said.
Some short-term investors who had bought pre-sale projects were under pressure to sell, and were willing to cut prices, he added. "For example, Billion Square in Tsuen Wan will be completed in July or August and buyers will have to complete their deals by then," he said.
"Since they were looking to speculate at the beginning and rental yields are not attractive, they are now in a rush to sell their properties and have cut their asking prices by about 10 per cent."
Properties on the market at prices ranging between HK$4,300 and HK$5,100 per square foot in February before the government doubled stamp duties were now on offer at prices ranging from HK$3,800 to HK$4,400 per sq ft.
But while market sentiment was clearly poor there was little sign yet of a big increase in defaults by buyers, according to Wu of Colliers. "There have been some defaults on strata-title office properties, but buyers of large lump-sum deals have stronger holding power and are willing to hold the property for the long term," he said.
Meanwhile, some investors and developers had shifted their focus to overseas properties. "For instance, we helped a Hong Kong developer buy a seven-storey office and retail building at Oxford Road in London for about £120 million (HK$1.45 billion) in April," Wu said. Colliers had also received an increased number of inquiries about investment opportunities in the United States and Europe, he said.
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