Hong Kong

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Hong Kong documentary maker Melissa Gecolea visited Australia recently to film Chinese buyer activity in the property market. Her report, titled Mainland Invasion on The Pearl Report went viral in China.
She concluded they were active in three markets: property for students, investment properties, and high-end homes.
"We're finding that in certain cases, property prices are being driven up, but it depends on what kinds of properties you're talking about," Ms Gecolea says.
"Some of them come here for a few days, with the intention of buying a place, and that's exactly what they do."
Still she says, what she found,wasn't as extensive as she first thought.
"It's not this 'property invasion' that had been presented to us…," said Ms Gecolea who has been the principal producer for <a href="https://programme.tvb.com/news/pearlreport/episode/20150511/" target="_blank">The Pearl Report</a>, TVB Pearl HK; and previously former co-host, writer for ABSCBN News Channel, On the Money.
"If you're talking about the luxury properties in Hong Kong, compared to the luxury properties here, I think the prices here are still good."
Melissa Gecolea says many buyers at auctions are third or fourth generation Australian-Chinese, rather than investors from China.
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jchancellor-FAypfDUnLy

Chinese buyers in Australia - a mix of fly-ins and fourth generation: Melissa Gecolea

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GUEST OBSERVER
Making vertical retail work for Hong Kong Vertical retail or so-called “Ginza- style” retail is increasingly popular in Hong Kong with both landlords and tenants, but this retail format offers both unique challenges as well as advantages to investors and users. 
Why Ginza? 
Ginza is one of the most popular and expensive shopping districts in Tokyo; like many parts of the Japanese capital, high land prices led to the early development of high- rise retail-cum-commercial buildings. 
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This type of building offers space at more affordable rents compared to high street premises, and also an extended, even 24-hour, operation environment which cannot been found in traditional shopping malls. Therefore, it is particularly popular for F&amp;B, Izakaya (Japanese-style bars) and Karaoke operators in Tokyo.
Hong Kong, especially the core retail districts, has the same space constraints as central Tokyo. Going upstairs or upwards seems to be a rational option for some retail businesses with limited capital or less reliance on foot traf c or impulse spending. A Ginza-style retail concept provides a more affordable alternative for independent retailers facing strong competition from international retailers for prime street-front space. This might be the only way for small retail businesses to access a prime districts nowadays – especially as street shop rents in prime areas have risen by nearly 140 percent since 2003.
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Likewise, landlords and investors are attracted by the decent returns generated from Ginza-style retail development. Spurred by the strong demand as well as the soaring rents of ground oor shops on prime streets, unit rents for Ginza-style retail space in prime locations can be 50% to 100% higher than general of ce space in the same locality. 
Ginza-style retail has become more popular in Hong Kong over the past decade and mushroomed in core retail and entertainment districts including Causeway Bay, Tsim Sha Tsui and Central. 
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Typical development form 
The concept of Ginza-style retail first sprang up in Hong Kong in the early 2000s, as landlords converted smaller of ce/commercial property in prime shopping areas for retail use to maximise their rental income. There are also purpose-built high- rise buildings designed for F&amp;B tenants. Development scale can range from a few oors (the Tokyo version) to a high-rise tower of over 20 storeys (the Hong Kong version) with typical oor plate ranges from 1,500 to 8,000 sq ft. 
<a href="/images/2016/11/14/Screen%20Shot%202016-11-14%20at%201.07.22%20PM.png" target="_blank">Click to enlarge</a>
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These buildings are usually located in secondary streets of prominent shopping areas and are characterised by a rather low-pro le entrance. In Hong Kong, these buildings are marketed as a chic F&amp;B destination with multiple choices with 50 to 60% of the total oor area allocated to F&amp;B, including restaurants and clubs, with a mix of services and service-based retail. 
Developed by H Development in 2001, Henry House on Yun Ping Road in Causeway Bay is one of the early examples of a purpose-built Ginza-style building in Hong Kong. The 28-storey building has a oor plate of about 1,500 sq ft with a single tenant on each floor. 
Other examples include Cubus, a joint venture development of The Hong Kong Parkview Group, CSI Property Ltd and Phoenix Property Investors. Opened in 2010, the 25-storey building focuses on F&amp;B, hair and beauty and specialty retailers. In Central, Stanley 11 on Stanley Street, has 20 tenants in over 26 storeys. With a focus on affordable F&amp;B offerings, the building is a popular lunch location for the office workers in Central. 
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To amplify the investment returns and also for branding purpose, some developments feature ground- oor retail, such as Oliv on Sharp Street East in Causeway Bay. Completed by Magusta Group last year, the project has high-end watch brand Franck Muller as the anchor tenant on the rst two oors of the 24-storey building. The rest of the building has a mix of lifestyle, F&amp;B and beauty retailers, with floor plates from 1,809 to 2,090 sq ft.
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How to be upwardly- mobile 
Ginza-style buildings only work best in core districts, where there is substantial footfall ie. enough customers to fill 20+ restaurants or bars in a single location! 
According to an experienced Ginza-style developer, the optimal oor plate size is between 2,000 and 3,000 sq ft, enabling tenants to occupy the whole oor with a reasonable lump sum rental and adequate resources. They have attracted a number of new and ourishing businesses to start their operations, including international retailers and F&amp;B operators, such as Lululemon, Mango Tree (an authentic Thai restaurant from Bangkok) and Jamie’s Italian Restaurant, who have set up their first Hong Kong’s outlet in one of these buildings. 
For developers, Ginza-style retail can squeeze greater value from an ordinary of ce building, especially those with small oor plates (&lt;3,000 sq ft). Tenant mix is crucial: smart asset management can create a stronger theme or a hub with similar retailers or groups of retailers which attract similar customers.
<a href="/images/2016/11/14/Screen%20Shot%202016-11-14%20at%201.09.30%20PM.png" target="_blank">Click to enlarge</a>
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 For example, a building with a gym, spa services and healthy eating options will attract a stylish, tness-conscious clientele. Similar to traditional retail development, theming and branding are becoming increasingly imperative to stay ahead of the game. Henderson Land’s new-build H Queen’s on Queen’s Road Central, has an artistic theme, with spaces for art galleries as well as shops and restaurants. 
A brand new development by H Development, Aura On Pennington aims to offer a ve-sense sensation in one destination to its customers, from art installations and motion- activated sounds to scent infusions and interactive signage. 
Uphill struggles 
Ginza-style retail does not guarantee success and comes with particular challenges. A key is vertical transport – can your elevators cope? A 20- oor building needs a rapid and efficient lift system to ensure that shoppers don’t get bored of waiting in the lobby, especially at lunchtime. A single bad experience waiting for a lift could turn them off for good. If your lifts are slow, don’t ll the top oors with restaurants.
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A Ginza-style building also needs to be able to cope with the utility needs, such as water supply, electricity, oor loading and waste management, of its tenants. An older of ce conversion might not be able to cope with the needs of ve oors of F&amp;B operators. Stanley 11, for example, is able to get around these problems for F&amp;B tenants by providing a grease trap and individually-controllable air conditioning. In addition to utility provisions, new technology such as free wifi, a digital directory and interactive restaurant queuing systems also help to enhance the overall customer experience.
In Hong Kong’s crowded retail market, Ginza-style retail offers a solution for both landlords and tenants. We foresee these buildings will remain a popular asset type. The key factors to bear in mind are: location, utility capacity, tenant mix and theming. Because this trend has grown over the last decade, a well-themed and curated tenant mix can mean the difference between success and failure.
This is an excerpt from <a href="https://www.savills.com.au" target="_blank">Savills World Research.</a>
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jonathanchancellor-7SQnKwU6yx

Making vertical retail work for Hong Kong: Savills

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CK Asset Holdings, controlled by Hong Kong's richest man Li Ka-shing, has sold a 73-storey Hong Kong office tower for $HK40.2 billion ($6.8 billion), which Reuters credits as the world's biggest ever single property sale.
It is being sold to CHMT Peaceful Development Asia Property, a British Virgin Islands-incorporated company, with 55 per cent of the investment coming from Beijing-based China Energy Reserve and Chemicals Group, according to local media, with the rest coming from Hong Kong investors.
The energy company is a unit of state-owned China Overseas Holding Group.
"The selling price is reasonable ... it's a positive signal to the market and I expect we'll see more large transactions of office buildings in Q4," said Tom Ko, executive director of real estate consultant Cushman &amp; Wakefield.
Australia's biggest single biggest office deal was a 49.9 per cent interest in Brookfield's $1.9 billion Wynyard Place development in Sydney.
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j.ballantyne1990-6AQqhLzZaK

Hong Kong sale of the world's dearest office building

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GUEST OBSERVATION
A Hong Kong student holding a sign detailing the protesters’ demands from the government.
There have been many explanations for the turmoil in Hong Kong, which is now heading toward its 16th weekend. However, the powerful links between the economic and political elites in the city and the grossly inadequate system of governance they preside over are too often ignored.
In explaining the source of Hong Kong’s unrest, many leaders have predictably blamed the <a href="https://www.scmp.com/news/hong-kong/politics/article/3017180/former-hong-kong-leader-tung-chee-hwa-blames-liberal" target="_blank">teaching of liberal studies in schools</a>. The notion that students should gain a critical understanding of politics and society – not to mention actively participate in these – is simply too much for those who believe they must make the big decisions.
On the other side, the ire of many protesters is overwhelmingly directed toward China and the Hong Kong government, particularly Chief Executive Carrie Lam. Lam’s actions – first disappearing and then reappearing with equal measures of bureaucratic steeliness and obstinacy – have only made matters worse, as have the actions of a police force once revered by many as “Asia’s finest” and the posturing of Chinese forces.
Indeed, the sum total of these efforts has been a <a href="https://theconversation.com/hong-kong-protesters-dont-identify-as-chinese-amid-anger-at-inequality-survey-suggests-122293" target="_blank">hardening localist identity</a> that has become more apparent among the protesters as the unrest has continued.
Moreover, mutual animosity has grown to such an extent that backing down by either side would seem unlikely. Indeed, for the last few weeks it has been much easier to imagine escalation than the opposite.
Decline without hope
However, the most likely explanation for the unrest lies not in the education curriculum or Beijing’s influence over the city, but rather the nature of Hong Kong government and society itself.
Despite the way the Hong Kong government markets itself to the world – emphasising the rule of law and promoting the city’s high-quality business environment – the city has actually been in decay for decades.
Firstly, Hong Kong has been subject to the “hollowing out” processes that have plagued many former industrial economies – a situation in which industry leaves and nothing replaces it.
Importantly, this has been coupled with an inability of those at the top end of town to recognise the vast inequalities this has contributed towards. According to government statistics, <a href="https://www.scmp.com/news/hong-kong/economy/article/2097715/what-hope-poorest-hong-kong-wealth-gap-hits-record-high" target="_blank">Hong Kong’s wealth gap hit a historic high</a> in 2017, with the wealthiest households earning 44 times the poorest.
For many here, life is experienced in the form of <a href="https://asia.nikkei.com/Opinion/Social-mobility-the-key-to-addressing-Hong-Kong-discontent" target="_blank">stalling or declining social mobility</a>, sky-high housing prices (<a href="https://www.scmp.com/business/article/2182980/nothing-be-proud-hong-kong-tops-table-worlds-most-expensive-housing-market" target="_blank">the most expensive in the world</a>), dire air quality, crumbling infrastructure (the subway system and airport being the only exceptions), highly uneven <a href="https://www.hongkongfp.com/2015/12/15/lets-criticise-the-inequality-at-the-core-of-our-education-system-not-just-the-symptoms/" target="_blank">education</a> and <a href="https://www.researchgate.net/publication/335269901_Poverty_affects_access_to_regular_source_of_primary_care_among_the_general_population_in_Hong_Kong" target="_blank">health services</a> (<a href="https://edition.cnn.com/2018/03/02/health/hong-kong-world-longest-life-expectancy-longevity-intl/index" target="_blank">despite the trumpeted statistics</a>), and lack of decent public spaces.
Long delays to move into public housing are the norm. “<a href="https://www.hongkongfp.com/2018/06/17/video-hong-kongs-box-like-nano-flats-tight-squeeze-young-professionals/" target="_blank">Nano apartments</a>” smaller than a parking bay are the only housing option for many, with many flats in the city housing multiple generations of families.
Young Hong Kongers who have been raised on the city’s golden age stories of tycoons like <a href="https://www.businessinsider.com/heres-how-li-ka-shing-became-the-richest-man-in-hong-kong-2015-6" target="_blank">Li Ka Shing</a> (known here affectionately as “Superman”) also face depressing futures in low-paying service jobs.
Moreover, higher education hasn’t helped young people secure higher-paying jobs. One <a href="https://www.scmp.com/news/hong-kong/education/article/2178402/hong-kong-university-graduates-take-home-less-pay" target="_blank">recent survey found</a> that average graduate salaries are significantly lower than they were in 1987.
While market fundamentalists like Milton Friedman <a href="https://www.youtube.com/watch?v=xqh0zXSd4vc" target="_blank">famously heralded</a> the entrepreneurialism of Hong Kong. In reality, it’s laissez-faire for the top end of town, and colonial-era bureaucracy for the rest. Young people contemplating opening a business face oligopolies, rapacious landlords eager to gain from the first signs of success and, in some sectors, rigid government regulations.
Making matters worse, anything vaguely progressive in a redistributive sense is often dismissed by anti-government protesters as too narrowly focused on economic factors at the expense of democratic reforms.
Much like the United States, which has become a positive reference point for many protesters, a pull-yourself-up-by-the-bootstraps individualism prevails in Hong Kong.
Frustratingly, rather than taking aim at the tycoons and conglomerates that dominate the economy, or the property developers and landlords who control the housing market, the main target of the protesters has been the government.
And the protesters don’t condemn the government for protecting the elite’s economic interests to the exclusion of many Hong Kongers, but rather for implementing the will of Beijing.
Why protesters aren’t focusing on economic elites
Indeed, even after some of the richest people in the territory voiced support for the government in <a href="https://www.scmp.com/news/china/diplomacy/article/3026960/casino-queen-pansy-ho-makes-pro-beijing-case-hong-kong" target="_blank">recent weeks</a>, very few in the protesting camp have turned their anger towards the city’s economic elites.
This fact speaks to the power of the founding myths of modern Hong Kong and how the city’s rich made good. There’s a certain reverence for the city’s tycoons that persists here, along with a lack of class consciousness and an ingrained ideological hostility towards anything vaguely left-leaning politically.
Moreover, while universal suffrage is a key part of the demands made by protesters, this overwhelmingly relates to the selection of the chief executive, not the structure of the government itself.
For instance, under an anachronistic colonial arrangement known as the “<a href="https://thediplomat.com/2016/09/what-exactly-is-hong-kongs-legislative-council/" target="_blank">functional constituencies</a>”, a host of economic sectors (such as the financial services, real estate and tourism) gain political representation in the Legislative Council at the expense of citizens.
Crucially, too, little effort has been made to explain why universal suffrage would be so important in Hong Kong beyond thwarting China’s influence. This has limited the formation of lasting coalitions within the protest movement that could rally around the idea of using increased political power to resolve pressing social issues.
Combined with some protesters flying American, British and colonial flags and waving pictures of US President Donald Trump on top of a tank, the movement often appears to be erring closer towards being just another form of reactionary populism.
Rebuilding hope and the city
The fact that young people are grappling with forging a more positive future is to be admired. However, for Hong Kong to have any reasonable future, the city requires nothing short of large-scale economic and political transformation.
Universal suffrage is one part of this, but in isolation it is insufficient. The question for Hong Kong is whether the protesters and other members of society recognise what needs to be done in a holistic sense and can pull together to make it possible.
In a city characterised by vast inequalities in economic and political power, this challenge is nothing short of revolutionary in the genuine sense of the word.<img src="https://counter.theconversation.com/content/123866/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
Toby Carroll, Associate Professor, City University of Hong Kong.
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/hong-kong-is-one-of-the-most-unequal-cities-in-the-world-so-why-arent-the-protesters-angry-at-the-rich-and-powerful-123866" target="_blank">original article</a>.
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Why aren’t the Hong Kong protesters angry at the rich and powerful? Toby Carroll

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There were very few Chinese property buyers flying out of Sydney after the recent Golden Week.
It is the annual early October period when Chinese tourists, taking advantage of their national holiday, have often departed Sydney with an investment property.
Agents advise there aren't as many Chinese apartment buyers, and those interested don't have the same buyer intensity they once did. There is also the desire for privacy which appears to becoming a paramount concern.
Prior years saw Australia's top agents pull out all stops with their welcoming red carpet. Chauffeurs in Bentleys were at the airports to then tempt the Chinese holidaymakers to make a residential investment purchase, sometimes even then throwing in apartment site inspections by helicopter.
For a few years now, data from the Foreign Investment Review Board (FIRB) has shown a reduction in investment.
There have been changing push and pull factors over recent years. Consecutive federal governments headed by Kevin Rudd, through to Malcolm Turnbull and Scott Morrison have obliquely or expressly sought to dampen Chinese investment to allow locals to have a shot at buying.
In 2010, the Assistant Treasurer Senator Nick Sherry announced a hotline for members of the public to report suspicious property buyers, amid measures to ensure foreigners did not put "pressure on housing availability for Australians".
The former Treasurer Joe Hockey ratcheted up the issue when he suggested one of his Hunters Hill neighbours be investigated by the FIRB after he became suspicious of the circumstances surrounding a purchase.
The sentiment of successive governments had been accompanied by a string of new and higher fees for foreigners.
The past few years have also seen significant policy changes in China, including tighter capital controls, such as limiting the outflow of foreign currency.
All these changes are likely to prevent foreign buyer activity rebounding anytime soon to its previous peak.
But it is significant that buyer website search activity from Hong Kong on realestate.com.au has been rocketing over the past six months.
Due to unfolding political unrest in Hong Kong, buyer search interest sits at its highest level ever recorded on the site, REA Group chief economist Nerida Conisbee has noted.
But while searches from Hong Kong are up, the same cannot be said for China.
Over the past 12 months it has dropped by over half.
Conisbee suggests factors at play include there being fewer Chinese developers being active in Australia.
She says there was also "a general negative sentiment towards Australian property".
The current Hong Kong turmoil reminds many of the heightened purchasing interest in Sydney property in the lead up to the 1997 handover of Hong Kong, when the United Kingdom ended administration of the colony.
For several years after 1997, the property market in Hong Kong did fall sharply, in part because of the unease about China's political grip on its regained territory. 
But the 2020 econo­mics of migrating and investing in Sydney, or the cheaper capital cities like Melbourne, makes sense to many in Hong Kong and China who are looking for a more affordable place to live.
Earlier this year, the Econo­mist Intelligence Unit ranked Hong Kong as the equal most-­expensive city in the world.
And a modest two bedroom apartment in China with no car park costs at least $1 million in most places in Beijing/Shanghai/Guangzhou/Shenzhen, according to Michael Yang at the GiFang website.
This article first appeared in The Daily Telegraph.  
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