東瀛樓市雖熱 深層隱憂不無 20240709

本文亦於2024年7月9日在【信報】刊登: 東瀛樓市雖熱　深層隱憂不無

 

過去數月，投資界茶餘飯後話題越來越多涉及「我們在二世古（港人可能較多熟悉Niseko英文稱呼）買樓」或「我們基金正又去東京掃酒店」之類的言論，就彷如全球其他投資地點都不值一晒，被打入了冷宮…

然而熟悉筆者論點的都應記得吾等已至少兩年勸奉朋際勿沾手日本地產。本文且簡陳箇中道理，以拋磚引玉。

若要長線取勝　必須逆流而行

近月市場對日本地產投資的興趣日益增加（見此），同時日經指數不斷飆升，可謂股樓皆旺。不過地產領域似乎更為火熱，尤其是地產基金界：

圖一：基金入市日本的新聞不斷湧現

誠然，過去兩年全球利率飆升殺了所有基金一個措手不及：其内部報率（IRR）計算如墮冰窟，由20+%常態一舉陷入零的邊緣，甚至更壞…同時，在對聯儲局降息的希冀幻滅之際，日本資產價格止跌回升便不難成為投資界新的救命草，繼而引發當下的東瀛掘金潮。

不過，未來幾年日圓大幅貶值的風險不容小覷，一不小心，少少資產升值反會被匯率損失吞噬。因此，筆者更偏好投資於貨幣和資產價格都會上漲的市場…

跨境投資算計　不可忽略外匯

回顧歷史，賺價蝕匯的個案多不勝數，且以下圖為例：

圖二：日本樓價以美元或日圓計價回報差天共地

在八十年代日本工業和文化雙雙崛起的鼎盛時期，不論日圓或美金計價樓價都在上漲（見上圖左方綠箭嘴）。對海外業主來說，美元計算的回報（紅線）比日圓計價（藍線）的升幅更高（見紫三角）。

然而在隨後「遺失的20年」間，日圓基本上窄幅橫行（中間的綠箭頭），結果以日圓計和以美元結算的樓價指數幾乎亦步亦趨，跌幅非常相似（紫平行四邊形）。

由於日本受制於人口收縮（見此），及新通脹周期下原材料價格飆升，日圓已處於一個結構性的貶值循環（第三個綠箭嘴）。正因如此，自2010年來儘管當地樓價上漲，但以美元計價卻錄得跌幅（紫梯形）。

筆者預計日圓的下一跌浪（右方綠箭嘴）將在未來三年展現，因而令海外投資者明升實跌（即藍箭嘴雖向上但紅箭嘴卻走低）。

以數字表達之，日圓的疲軟（第二列紅色區）對以美元計價的東京樓價實在有舉足輕重的影響（右列打勾年份）：

表一：日圓漲跌影響海外業主的實質回報

當然，上表中2025-29年的預測純粹基於【圖二】中憑判斷而畫的箭嘴，到時樓價和匯率皆未必完全跟隨，然而美元計回報為負數（右起第二列）的風險依舊是非常實在的。

日本前景　遠非樂觀

為了引進通脹、紓緩封關所帶來的經濟惡果、以及減輕日漸高築的政府債台（經合組織中最高），東瀛的貨幣／財務政策導致民眾的實質收入過去四年基本上都在下跌：

圖三：日本實際工資長時處於下跌區間

同時，生活成本危機導致私人消費連續兩季下降，而最新的本地生產總值亦再度出現收縮情況：

圖四：日本實際生產總值萎糜不振

同時，地緣政治的緊張局勢必將利率進一步推升：

一）中國（13年内從8.9%降至2.2%，見【圖五】紅區）等傳統國債大戶似乎正在減低美國國債的持有量。事實上就連日本也在債主比重中一直下降（從9.5%高位跌至當前的3.4%，見藍區）：

圖五：日本及中國持債量與比重逐季削減

二）烏克蘭及中東衝突蔓延引發商品價格上脹，作為一個資源貧乏但製造業密集型經濟體，較高的成本（例如油價，見【圖六】藍線）往往會引發經濟收縮（紅色區域）。綠線僅假設油價回到150美元/桶及所帶來的經濟收縮（紅箭嘴）；若果國際戰爭再次爆發，油價甚至隨時大大抽升於筆者預算以上：

圖六：高油價不利以製造業為本的日本

除了戰爭對成本造成的壓力，日本最近越趨明顯的軍事化動作，以及與日俱增的戰爭蔓延到亞太地區之風險，都會導致資本逃離日本市場：

圖七：日本軍事化動作頻仍，令人擔憂

三）主權債務危機影響日本更甚於美國——隨著美國財政紀律敗壞（一年內增加了3.5萬億美元的債務！），長債息率除了上漲（【圖八】右方橙色線）別無選擇，從而將扯高日本債息（綠線）。就算假設地緣政治／主權債務一如既往，低到可笑的0.87%日本國債收益率在新的加息潮下就算大漲兩倍（至2.5%）都仍然遠遠不及美債吸引，因此資本外流美國的現象只會加速：

圖八：加息周期下日本債息難免不升

 

在資金棄日赴美的情況下，日圓再跌25%至200水平都不為過。最怕是日圓的貶值變得無序，因而出現日債息率（綠線）升至至高於美債（黃線）的極端情況：

圖九：無序走資時日債收益率甚至會高於美債息率？

如此極端的情況下日圓可能須貶回到270以上的水平。這與市場在「錨定偏見」催眠下仍一廂情願地預測的150的水平大相徑庭。

實質回報低　日樓引力弱

再以地產相對收益率與其他市場比較，筆者較看好的金邊／雅典有更高的實質回報，同時悉尼／新加坡／東京卻敬陪末席（右起第三列）：

表二：環球城市實質租金收益及相對債券溢價一覽

在主權債務危機下，美國市場應會成為資金的避風港，因而令歐洲和日本市場變得缺乏吸引力。從此角度看，似乎香港／紐約樓市因可避免債息無序飆升而顯得較低風險（右二列）。

基於上述不同的因素，若要沾手日本樓市，必須：1）鎖定長期固定利率借款；和2）借日圓做槓桿或後備充分的對沖。但即使是大型基金，又有多少採取這些預防措施？筆者對此存疑。無論機構在其他方面看起來多麼聰明，在某些重點上卻與凡人無異（見此）。

 

 

筆者特別鳴謝香港城市大學金融學系潘明玥同學協助收集及整理本文相關數據及圖表

Is the big rush into Japanese property justified? 20240529

We have heard nothing other than 'we are buying Niseko ski flat' or 'our fund is adding Tokyo hotel' for the past few months, as if the rest of the world is all in the dog house...

Clients familiar with our arguments will know we have been negative for at least 2 years on the Japanese market, so this email seeks to give a more rounded exposition on why.

When crowds scramble one way, we go the other

The recent scramble for adding Japanese exposure (see Article 1) is in line with the concurrent rise in the Topix, but in property land there is even more momentum, especially amongst funds:

Granted, funds have been sitting on their hands in the past 2 years as interest rates globally spiked, and their IRR calculations were thrown into disarray. So the wishful hope that Fed rate cuts will be implemented (now proven wrong), plus a reversal of Japanese asset depreciation has sparked a sudden fad into pumping money into the land of the rising (may be now setting) sun...

We are very wary of the much more significant risk of Yen devaluation against whatever puny asset appreciation in the currency in the coming years however, and would prefer other jurisdictions where BOTH currency and asset prices will rise (regular readers will know where that is!).

FX should be central in investment decisions

The point of making price gains but adding translation losses is best illustrated with a view to history:

As shown above, during the haydays of Japanese industrial and cultural ascent, both asset prices in local currency (LC) and exchange rates were on the rise - see left green arrow. The combined effect for foreign investors is even stronger returns in USD terms (red line) than locals (blue line), shown by the purple enlarging triangle.

In the subsequent lost 2 decades, Yen basically went sideways (2nd green arrow), with price drops very comparable in LC and USD (purple parallelogram).

We are now probably into the next leg of Yen derating (see 3rd green arrow) thanks to shrinking population - see Article 3 - and the resurgent commodities complex when all input materials see price spirals. Unsurprisingly, since 2010, despite LC price gains, USD denominated values fell (purple trapezium).

We expect the next (final) down leg in Yen (4th green arrow) to unfold in the next 3 years or so, which can also destroy value for overseas investors (ie down red arrow despite up blue arrow).

To put it in numbers terms, below is a table showing the impact of Yen weakness (red shades) vs USD denominated Tokyo home prices:

Of course, the 2025-29 projections above are purely based on the arrows in chart above and may not play out the way we projected, but the risk that you get negative USD returns (2nd column from right) is very real indeed.

Macro picture for Japan: far from rosy

By the combined will to reintroduce inflation and to inflate away the mountains of govt debt (highest in OECD), the Japanese work force has been earning negative real income for the past two years:

In the meantime, the cost of living crisis left private consumption down for 4 quarters in a row, with little help to exports (net exports were increasingly negative in recent quarters) to contribute to GDP growth:

In the meantime, the geopolitical tensions between China and US is causing the rate environment to surge further, due to:

1) loss of demand for US debts by big traditional owners like China (fr 8.9% to 2.2% in 13 yrs) and HK, in fact Japan has also been falling in total proportion of US treasury holdings (fr 9.5% to 3.4% now):

2) Ukraine/Middle East conflicts likely to trigger more input price inflation, eg oil prices - and as a resource poor but manufacturing intensive economy, higher oil prices (blue line, down is higher prices) will tend to trigger economic contractions (red area). The green line is merely projecting prices returning to $150/barrel, which can easily be exceeded should international wars flare up again:

The result would be grim for Japanese economy. If wars spread to the APAC region, there is an added strong chance of capital flight from Japan given its recent militarisation movements might scare foreign investors away:

3) bond rout will impact Japan more than US - as US fiscal profligacy continues (yes, by adding $3.5tr debt in one year), long bond yields have nowhere to go but up (orange line), this will drag JGBs up with it (green line). Assuming totally benign geopolitical/sovereign debt calm conditions, the laughable 0.87% JGB yield will still nearly triple to 2.5%, and this 'benign' expansion of US-JP yield spread may trigger further capital outflows as money seeks higher returns in the US:

The result? Yen could drop another 25% to the 200 mark.

If this Yen drop becomes disorderly, it could result in JGBs trading at premium to TBs, leading to the much more nightmarish outcome of 10.5% JGBs vs say 8.5% TBs:

Such an outcome would mean Yen has to return to 270+ levels, much against the wishful sub-150 levels the 'anchoring biased' talking heads out there could imagine... or a 45%+ drop from current levels.

Real yields also too low to be attractive

Back to our usual real property yield table - Sydney/Singapore/Tokyo are some of the lowest returning markets on inflation adjusted basis (3rd column from right), compared to Phnom Penh/Athens which are our preferred investment destinations:

In a bond rout outcome, both European and Japanese markets will suddenly look much worse as US becomes the safe haven, thereby helping HK/NYC (2nd column from right).

Based on these various factors, we will only touch Japan if: a) long term fixed rate borrowing can be locked in; b) Yen leverage and/or hedge are put in place. But how many even the big institutions are taking these precautionary measures? We doubt many. On this note it is interesting to demonstrate how institutions are mere humans, however smart they otherwise appear: see Article 2.

==================Article 1==================

Interest in Japanese real estate grows despite rate rise prospects

Mar 8, 2024

Institutions and family offices are backing real estate for another strong year, despite the prospect of the country’s first interest rate rise since 2007.

​https://www.asianinvestor.net/article/interest-in-japanese-real-estate-grows-despite-rate-rise-prospects/494795​

==================Article 2==================

Hidden billions in Tokyo real estate lure activist hedge funds

Apr 16, 2024

The long-concealed market value of Tokyo’s largest skyscrapers is being unveiled by activist investors.

​https://www.japantimes.co.jp/business/2024/04/16/companies/headge-funds-urge-japan-real-estate-sales/​

==================Article 3==================

Japan’s Population Declines Again: Seniors 75 and Over Top 20 Million for First Time

Apr 24, 2024

An estimate published by Japan’s Ministry of Internal Affairs and Communications shows that the total population as of October 1, 2023, was 124,352,000. This was a drop of 595,000 (0.48%) from the previous year. It is the thirteenth consecutive year that the population decreased. The population of Japanese citizens was 121,193,000, for a record year-on-year decrease of 837,000, or 0.69%.

​https://www.nippon.com/en/japan-data/h01967/

HK Petrol Supply should be treated the same as Electricity/Gas 20231128

There is one thing that Hong Kong reigns supreme on global league tables – besides its high academic IB scores or long life expectancy – the city is the world’s most expensive place to buy petrol:

Figure 1: not the right reason to be named world #1?

So just how expensive is the cost of petrol to the citizens living here, and is there something that should be done about this exorbitant cost? Below we delve into the wonderful world of high land costs, oligopolies, and misdirected net zero policies to unravel this unfair set up that is likely hampering business and living costs for all Hongkongers.

 

Disadvantaging business vs competitors

Naturally when comparing competitiveness with other jurisdictions, we turn to fellow small open economies such as Singapore and Switzerland, while also benchmarking two larger countries for added context. In this exercise we have chosen Japan (for Asia comparison) and USA (for global context):

Chart 1: absolute petrol prices – HK is head and shoulders above rest of world…

Chart 2: we pay almost 3x as much as the average US driver

According to Bloomberg/globalpetrolprices.com data, it is eyewatering how expensive Hong Kong’s petrol cost (U$3.09/litre in Oct 23) is compared to Singapore which comes in at U$2/litre, while Japan sits almost 40% lower than Singapore still at $1.21/litre. But US really rules the roost, where costs are another 12% lower at only U$1.07/litre (Chart 1). To put everything in the context of relative premium to US prices, Singapore is already at a high 92% premium, but Hong Kong for reasons we will look into below, doubles that, coming at a whopping 189% premium (Chart 2) – what is disconcerting is how the HK premium has been very steadily ranging from 150-200% since much of the past 10 years!

Petrol overpriced against premium office rent AND per capita GDP

Is this expensive fuel cost a function of Hong Kong’s high productivity or expensive land costs? Sadly not. When plotted against Grade A office rents of various top financial centres, HK really stands out in how costly its petrol is – to return to the regression norm, the price of petrol needs to plunge some 25% as a minimum:

Chart 3: HK’s high petrol costs not justified even factoring in its expensive office rents (as a cost proxy for businesses)

Maybe Hong Kong’s expensive real estate is a reflection of its underlying economic productivity? So we plotted the petrol costs against per capita GDP also – here the trend shows much tighter clustering around the regression line:

Chart 4: petrol costs unjustifiably high in context of our economic output

Except Hong Kong that is… Being a true outlier, our petrol prices needs to be cut an even bigger magnitude of 45% to be near the global trend line!

A double whammy of govt & big oil plundering?

To properly analyse the phenomenon of high prices, we first look at whether Hong Kong is buying more expensive international oils:

Chart 5: Import price seems to be relatively stable compared to average Brent price (and rightfully so)

It seems the spread of imported petrol over Brent price has been quite stable even though the premium does vary from teens to high 30%s in the period we looked at above. As a result, Brent oil price can be a useful approximation to the cost of gasoline for imports into Hong Kong (in the absence of dedicated granular data series thereon).

Breaking out the retail prices into its key components, we can see once more how much the consumer is being disadvantaged compared to other countries – whilst the American driver pays only 42% of hiss pump cost to the oil company and government (the rest being cost of the underlying oil), Hong Kong drivers fork out 81% in the pump price to government and oil company (Chart 7), a truly exorbitant magnitude indeed:

Chart 6: Breakdown of pump price – HK is shockingly high on tax and fees

Chart 7: The same components in % terms – HK consumers pay dearly above underlying costs

Here HK in absolute terms are even more jaw dropping – but what surprises us most is how large the profit element is that the oil company makes, after the government already takes the biggest tax chunk out of all comparable markets already (Chart 6).

But has it always been like this, or is it something that happened recently? Looking at the past 18 years, the government levy has not moved (despite being one of the highest in the world all that time!), but it is the major spike in oil company profits that has hiked costs to the consumer:

Chart 8: Pump price – the biggest rise were in oil company margins over the past 2 decades

If we indexed the oil company margins against HK property prices it actually came in lower than home prices in the same comparison period, but something funny happened in 2018-9 period to the cost of petrol station land costs (blue line), which rose much much more (perhaps due to a combination of new entrants and the government suspension of new station tenders):

Chart 9: Comparing price of petrol filling stations; margins, and home prices

But in any case, the significant surge in recent years in oil company margins (now well above inflation index) bodes ill for consumer affordability.

Not only was the arbitrary cessation of petrol station roll out harmful to competition, as the number of cars will not stop rising as the economy and population grows in the longer term, the wishful thinking that everything can go from carbon based fuel to electric from now on (which was the basis of ending new petrol station tendering) is both unrealistic and counter-productive:

Chart 10: how likely can HK go from 85% carbon fuel to zero in 20 years?

The outright plunge by global bureaucrats towards their utopian of zero carbon targets by 2030s will create endless suffering to the people over whom they govern – a glance at the blue areas above shows how overwhelmingly dominant the global economy and people’s livelihoods are powered today by carbon sourced energy.

To impose a planned economy style hard target over the citizenry and deprive them of essential energy (red arrow) will surely return civilisation back to the stone ages – in other words, the impossibility to come up with a substitute energy capacity in such a short span of time (represented by the vertical orange arrow) means the global population, if all following this mad course of action, will be deprived of 85% of their current energy needs…

In view of the above, the HK govt should rapidly reverse its policy and start issuing new petrol station sites without delay – or consumers will continue to suffer.

A new model for petrol station licencing?

Back to the question of affordable fuel for the end user – the traditional way the HK government tenders out station sites has been on a land sale mentality – that is, with a view to selling the site areas to fetch the highest land revenue for the government and not with a purpose of creating a sustainable after market for the masses.

However, if we view petrol as an essential part of people’s daily needs, much like telephone and electricity then why should we not tender petrol stations on a different formula? Whereas the telephone exchanges and electric substations are pretty much given away for free, we submit that petrol stations should also be tendered out based on minimising future fuel costs.

The objective of controlling electricity costs is achieved by the Scheme of Control framework, which is based on return on capital invested. What we should do on petrol stations perhaps, is to have the oil companies bid for each station where the winner of the site is the one that promises the lowest price margins over the prevailing oil price at the time? Not only is this simple formula easy to monitor from an ongoing basis, it introduces a mechanism to drive down long term fuel costs and every economic sector of the society will benefit, rather than just the government’s one off land sale income. Which would you rather trust to keep the spoils from reduced oil company profits – the government or the people? The answer should be beyond dispute…

 

The author would like to thank Chan Hei Lui Kiandra from The University of Science and Technology majoring in Quantitative Finance for assisting in data collection and analysis of this article.