Park Island Property Prices - new records set for "small sized units".
According to agents on the island last week was a busy month, with lots of enquiries from potential buyers.
I was sent the article below by a property agent on Park Island:
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| Park Island Property Newspaper Article |
In summary, the article reports that "small size apartment" sales broke record twice within the last month.
Park Island, Block 17, Mid Floor, Flat G
Size 449sqft
Price sold 3.12M ($6949 per sqf)
The owner brought in 2010 $2.45M and how now sold earning $1.33M up 54.8%.
According to the agent, the seller is now looking at buying a larger apartment on the Park Island. My comment on that is that whilst it appear the seller made a good profit, the larger apartment will of course also have risen in price, so from that perspective his "relative gain" may not actually be that much, as apartment prices everywhere (not just on Park Island) have risen substantially since 2010.
Some of these "small size" apartments were originally given to villagers from Ma Wan as part of the development deal with Sun Hun Kai. They are apparently popular with staff at Hong Kong airport, such as air hostesses, and, according to agents are getting a lot of interest now from people who want an entry into the Hong Kong property market. Some are being bought by mainlanders who use them as a relatively affordable place for children who are attending university in Hong Kong. And there are also people who travel between Hong Kong and China, and other parts of Asia who use these small size Park Island apartments as their "Hong Kong" residence (ie a postal address, a safe place to store belongings, a nice place to stay when in Hong Kong, close to airport for frequent travellers, better value than a serviced apartment in Hong Kong, a rented property for tax purposes, etc).
I have not actually seen a 449sqft Park Island apartment, but I assume they must be one bedroom, one bathroom, with a relatively decent kitchen and living area (ie certainly much more spacious than an apartment advertised as the same size in the Mid Levels or other parts of Hong Kong. If anyone has photos of such an apartment or can comment on the layout etc please do let me know.
For readers wondering what the difference between a "gross" and "net" price is, "gross" is what was historically used in Hong Kong, by sneaky developers who started adding in things like lift lobbies and other "public areas" into an apartments "size", resulting in all apartments in Hong Kong in reality being smaller internally than the advertised size. So a "gross price" will be lower, per square foot, as you are not measuring internal space but rather "total space". The "net" price is the true price you pay based only on the internal space in the apartment.
Meanwhile, according to the latest Centa-City Index for Hong Kong property transactions, Park Island last week hit a record high, with average prices now at $6299 sqft gross, and $8186 sqft net.
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| Hong Kong Property Price Graph (Park Island) |
The inevitable question arises, are prices for property in Hong Kong going to keep rising? My feeling is that yes, as countries continue to print money and keep interest rates low, property in Hong Kong will continue to rise, in part because of its affordability (provided you have saved enough for a deposit) and also because property is increasingly being used as an inflation hedge to preserve the value of ones savings. (Ie, if Governments put 10% more currency in circulation, the value of any cash you hold devalues by 10%. On the other hand if you put it into property, the value of that property should increase by 10%). I think we have a good 3-4 years of relatively strong price growth for Hong Kong property ahead of us. And I have already outlined in prior posts in my Park Island blog why I think Park Island in particular makes good investment sense.
I will comment a little further on the ferry service issue and the possibility of future private parking on Park Island in my next post. I did see a petition calling for private parking on Park Island Allow Private Cars on Park Island which I have given my support to. I will elaborate on my thoughts and and a few further updates in insights next time, but in summary I support private car parking for residents only, and not in the actual estate, but rather on undeveloped land on Ma Wan, next to Park Island.
Now I need to go any enjoy my Sunday, some of which will be spend around the pool at the Blue Blue club.
I am in favour of Cars on Ma Wan...to some extent. We should build a big car park under the Tsing Ma bridge - which would be relatively hidden and would not damage any of the exisiting beautiful natural wild landscape of the island. This should be quite easily doable. This car park would be for residents only. The cars would not have the right to drive on the island. The island would still stay car free. They would go directly from the Tsing Ma bridge, on to the Ma Wan entrance to the car park. Only buses should keep on driving on Ma Wan (in an ideal world those buses would drive a little slower)
ReplyDeleteI know a lot of residents would want to keep the island 'car free' and this solution should make everyone happy don't you think?
Yes, I support this idea too. Its the best overall solution, and I think would be overwhelming welcomed by Park Island residents.
DeleteYOu are right about one thing. Prices will keep rising. Its also due to other factors than just inflation protection. All of NT is going to need to accomodate more mainlanders, who will find a way in one way or another. Many Chinese, local and mainland aspire to own Hong Kong property and the taste for a place like Park Island will grow over time.
ReplyDeleteCan you put an actual source for the data. What website link is it from? And also how about transation volume? Any reported data? The pricing guidance is helpful as we are looking to buy in the next few months.
ReplyDeleteTransactions can't be too high - one of the estate agents has recently shut down - the one that was next to what was a language school.
ReplyDeleteI WILL NOT SAY TOO MUCH HERE BUT THERE ARE SOME DEVELOPMENTS IN THE FUTURE THAT WILL LIKELY BODE VERY WELL FOR PEOPLE WHO OWN PARK ISLAND PROPERTIES. I CANNOT TELL THE DETAILS BUT YOU WILL HEAR OF THEM SOON OFFICIALLY.
ReplyDeleteYou mean you are buying a keyboard where the Shift Key isn't stuck?
ReplyDeleteA welcome development indeed.
Thank you as always for these useful updates. Positive news for owners is always welcome. I think prices will increase alot for the next few years and then slow if interest rates start rising, which they have to eventually. In my mind the biggest boost for Park Island could come if the car issue is resolved. If the TD finally approves car access this would really push up prices, some people say up around 30% from current prices.
ReplyDeleteLol about the SHOUTING!!!
ReplyDeleteSo what's the good news? Private cars allowed or what?
We own a 1000 square foot unit on Park Island. Over the weekend we were approached by an agent offering 8.5m from an interested customer.
ReplyDeleteWe did not intend to sell so we did not take it further, but if this is a real offer it indicates prices are really rising. The agent was apparently deperate to find a seller for his client.
Our unit is on a mid to high level with ocean views.
Smart move. I heard of someone who was offered 8.9m for a 1000 sqft apartment recently. Stunning view admittedly and also nicely renovated. I would suggest sticking tight if you plan to live in Hong Kong. If you are moving overseas on the other hand, you could seek a high price and sell, or just hold long term and rent it. I am sure rents will rise over time.
Deleteman you wrote as ANONYMOUS! so if you know something why dont you tell us? unless you're talking nonsense...
ReplyDeleteWe bought on Park Island earlier last year, worried that prices were already high. Clearly we were wrong in our concern, and we are now as first time buyers in Hong Kong very happy with our investment.
ReplyDeleteFirst and foremost though, we did not buy to make a profit. Hong Kong thrives on gread and money but what about simply buying for a nice home? That was our primary reason for buying and if you buy fot that reason you will probably make better decisions. We are really happy with where we are now in HK and even if we evntually leave, we might actually rent out place out and then get a decent return on it that we can use when we are overseas as regular income.
Transaction volume also picking up. You can see the transactions for Park Island here http://hk.centadata.com/eptest.aspx?type=3&code=WDPPWPPEPB&info=chart&code2=&page=0
ReplyDeleteAssuming we are allowed to post links?
Yes, links are fine, privided they are relevant and helpful. Feel free to post.
DeleteThank you for all the info. a great blog.
ReplyDeleteDen
There was an article in the HK Standard about why smaller apartments will now see increased demand and prices rises as they are targetted by investors. I am sure this is part of the reason why smaller Park Island apartments are now becoming very sought after. Also, they are obviously the most affordable for anyone wanting entry into the property market.
ReplyDeleteHome hunters change target
Homebuyers and investors have switched to targeting cheaper flats - pushing property prices to new highs - following the introduction of the latest mortgage tightening measures aimed at curbing runaway prices. Analysts are skeptical over the effectiveness of the Hong Kong Monetary Authority's moves as most investors are financially strong and don't need to borrow.
Sharmaine Lau Yuen-yuen, chief economic analyst at mReferral, said investors who previously planned to buy medium-priced flats will merely switch to cheaper units. Realtors detected this reaction immediately after the HKMA's measures were announced last Friday.
"Buyers who originally planned to purchase another flat for about HK$4 million to HK$5 million now have to look for those HK$2 million to HK$3 million flats," said Angus Yeung Sze- yin, branch manager at Centaline.
Meanwhile, 30 to 40 percent more purchasers in Sha Tin are now hunting for cheaper flats, especially in City One, said Angus Chan Tik-ho, chief district manager at Centaline. The higher demand allows the owners of such units to jack up their asking prices. For example, a 395-sq-ft two-bedroom flat at City One sold on the weekend for HK$3.25 million - or a record HK$8,228 psf, Chan said.
The owner of a similar flat promptly boosted his asking price to HK$3.2 million from about HK$2.9 million - and then pulled the unit off the market, anticipating further price appreciation.
Lau forecasts home prices will climb another 3 to 5 percent by the end of the year, driven mainly by the mass market. However, surveyor Pang Siu- kei said all price ranges are on the rise, because of hot money resulting from the latest round of monetary easing in the United States.
Furthermore, most analysts don't expect the new HKMA measures to affect the local market beyond the short term.
Chau Kwong-wing, chair professor of real estate and construction at the University of Hong Kong, said the 10 percentage point tightening in debt- servicing ratio has minimal impact on locals seeking property investments, as most have sufficient capital.
Raymond So Wai-man, at Hang Seng Management College, said: "Half of the homeowners do not have a mortgage, and thus won't be affected by the new measures."
Only about 10 percent of borrowers won't be able to purchase their targeted flats because of the HKMA's tightening, said Lawrence Poon Wing- cheung, chairman of the housing policy panel at the Hong Kong Institute of Surveyors. And just 2 to 3 percent of mortgagors with multiple properties will switch to buying smaller flats, he added.
Thanks for posting Danny. I entirely agree with the reasoning of the article.
DeleteIts funny when you look back prices used to be 4500 psf, now nearly close to double that.
ReplyDeleteCheck out this thread from Asiaxpat where they compare Park Island to Discovery Bay and how everyone is bagging DB compared to Park Island these days.
http://hongkong.asiaxpat.com/forums/hong-kong-property/threads/80624/thoughts-park-island-(ma-wan)/
One quote I specially like from there,
PI is: more convenient, you have direct access to Central, Tsuen Wan, Kwai Fong, Tsing Yi, Airport in shuttle bus who do not stop, or in ferries. Taxis are allowed to come nearly 24/7.
The flats are better, newer, have better views and are a LOT cheaper.
Every single resident is allowed access to 3 amazing clubhouses. Tennis courts, basketball courts, climbing wall, squash, snooker, pool, table tennis, badminton, 2 outdoor swimming pools, 2 indoor swimming pools, bowling etc...
In DB what do the residents have??? err....nothing.
PI has a huge Park and Shop...DB has an overpriced one. Buggies on DB is just p*ss take. 500k for a buggie are you kidding me? In PI, once you are on the island, it's a LOT more convenient. You can walk everywhere within minutes. No need of those ridiculous buggies.
Ma Wan has a history as well. One of the oldest fisherman village, some local culture, some of the most ancient temples and cemeteries.
DB is just Disneyland for gwailos. Everything is fake, expensive, inconvenient...and when i say Disneyland, the estate agent actually sell it to you that way. I visited flats there years ago and they told me "the big advantage of this flat is that you can see the Dinseyland fireworks every night" haha GREAT!
I know that people have different taste and some prefer DB....to each his own, but I would say they only like it because they need the community of expats to feel safe.
If you only look at the location, flats, views, convenience, price, clubhouses, facilities then PI wins. How could someone argue with that?
HAHAHA yes of course Park Island is better than DB, and cheaper too! DB is for suckers who end up paying far roo much for living there. PI is much nicer, more livable, and cheaper. What more could you ask for?
DeleteAre you allowed to post links here?
ReplyDeleteBuying and living in a nice home in a nice environment should be the ultimate goal. From an economics viewpoint, Park Island remains affordable in comparison with other older run down areas. To buy now or rent is always a difficult decision but should be aware of the benefits of owning in an era of likely onset of inflation (money printing by central banks in major economies). Owners lock in their debt at historic nominal value where their asset i.e. home/property is subject to inflation. Many refer it to inflating your debt away. If you are letting your property your rental income will rise with inflation but your nominal debt will remain unchanged. What is the risk? Interest rates going up will be additional burden to homeowners and property prices collapsing is another risk factor. So it depends on how you see the risk factors panning out but market sentiment today is tilting towards owning. But buying for the long term eliminates the worry since you are likely to ride through property cycles - further enjoying where you live should be the fundamental consideration. For many, Park Island fulfils many of these considerations.
ReplyDeleteLW
I used to rent a flat in The Merton in Kennedy Town. It was a nice sea view flat, the building is about the same age as of the ones in PI and only has 1 Club House. It was a 886sq ft (667 sq ft NET) and it is worth according to the HSBC Valuation website $12.45M !
ReplyDeleteI bought on PI a flat 914sq ft (710sq ft NET) of similar age, also full sea view and similar layout (same kind of shape. 3 beds, 2 baths) for just $5.7M
Isn't that crazy? You can get a better enviroment, better club houses, better and bigger flats with actually better views for about 60% cheaper???? Just because it's not HK Island and you don't have cars there.
Don't get me wrong, i loved Kennedy Town. It's great. But definitely NOT worth the price difference.
Also one thing worth mentioning. a lot of people who do not live in PI have a wrong idea about that. It's the Typhoon situation. They all say it's a hassle to live in Ma Wan in case of Typhoon, we can be stranded etc... well believe it or not, I work in Central, and when there is a Typhoon, I am usually home before ANY of my colleagues who live in Wan Chai, Kennedy Town and Mid Levels. Why? because when there is a typhoon, the taxi queues and buses queues are just CRAZY in HK. you have to wait for hours. However,for us, you just walk to the Ferry Terminal (and you can walk everything indoor protected from the rain from the HSBC buiilding all the way to the Pier) and the Ferries are always on time, and you always have a seat!
That was exactly the feedback I got from friends who live in HK Island. So ironic that they actually suffer the inconenience more during typhoon days.
DeleteI also hear that people take over 45 mins travelling from Tai Koo Ching to Happy Valley getting home from work - due to poor transport connections and long queues. Makes Park Island commuting look like a breeze.
Good point about the typhoon. There are actually a number of "myths" about Park Island. One is this thing about the typhoon you occasionally hear - and I agree, my experience is that its actually very easy to get back when a typhoon is approaching. I think this story might come from back in the 1960s when islands were harder to reach and typhoons were more serious in HK!
DeleteAnother common myth is that that "planes flying over disturb residents". Again, I used to hear that, not recently but I heard it from people who have never been there when I first moved there. And when I got there I realized Park Island was very peaceful!
Its funny where stories like this originate from. HK is such a funny plance in this regard :)
Thanks for all your updates. We actually bought on Park Island at one of those higher prices recently. We actually feel OK about it and noticed today many people out looking to buy. We are in now, and either way is much cheaper to be a buyer and pay off a loan rather than rent which is essentially wasted money.
ReplyDeleteAnthony, congratulations on your recent purchase. The interest rates is likely to stay low for at least a year if not two. Savings from that should not be downplayed. A friend of mine who is staying on the South side of HK Island is also looking at Park Island and I will be showing him around soon. When PI opened in early 2002, a lot of residents moved from Tsuen Wan and Tsung Yi, now they come from all over looking for tranquility and quality.
ReplyDeleteIMF says no bubble seen in HK housing market.
ReplyDeletehttp://www.aastocks.com/en/News/HK6/61/NOW.510925.html
Reports showing prices in DB also achieving record highs. New developments are in the $12k-$14k psf range which makes Park Island very reasonable in comparison. Agents also say that the supply at Park Island is not much which will keep supporting prices. When the cheaper units go that is when we expect to see bigger price hikes as those who wanted to leave have gone and a higher premium is required to entice other owner/residents to put their PI property on the market.
ReplyDeleteMaybe some people are in the know on upcoming transport changes. If we are having insider buying by people from SHK or the Govt that know transport will eventually open to cars, and they are now investing in advance of this that would fxxxing piss me off. What about openness, and telling everyone publically if or when they will allow private cars there.
ReplyDeleteRentals are also rising on Park Island, not just sales prices. Its a supply demaand equation and as prices go up in the property market rents go up across HK people find PI more attractive pushing up the rents here.
ReplyDeleteI wonder how market distortion arising from the government's new "anti-speculation" measures on property prices manifest itself? Would it really translate into lower property prices? Time will tell but the government is sounding desperate when it promised a thinly veiled threat of more actions to follow if the current measures are not effective.
ReplyDeleteCome to think of it, are there many speculators? Hardly any "confirmors" after the introduction of special stamp duty. Not heard many stories of properties being flipped like the old days of the late 1990's.
Tom Holland of SCMP said that raising special stamp duty rates will only back fire on the government. Sellers will pass the extra costs to buyers. HK is emulating Singapore which introduced the measures last year but prices continue to spiral upwards. Poor John Tsang - he has a good heart but not much up top is what Tom was saying.
ReplyDelete