【TVB 財經透視】 房屋政策 20211010

載於2021年10月10日 【TVB 財經透視】 房屋政策／獨角獸

焦點問題:

1. 施政報告
2. 房屋供應
3.政府自我角色衝突問題

TVB播放部分（約一分鐘）：[TVB 財經透視] - 房屋政策 

完整訪問如下（約15 分鐘）： [TVB 財經透視] - 房屋政策

 

 

 

 

請前往作者YouTube頻道觀看更多視頻: 王震宇宇論 Yulun

HK Policy Address - Implications 20211006

 Some interesting land related new measures, in summary:

a) the new Northern Metropolis is the big push to unshackle agricultural land use and to more than double the residential stock from 390k units now to up to 926k - uncertain how land resumption is to be carried out but positive for inaccessible farmland owners for sure;

b) a bundle of new rail projects (see art 26 below), mostly in the North;

c) crazy throwing of resources at 'scitech' related quangos - lots of coverage on Science park (land reclamationg + 88 ha. of land), Cyberport, Lok Ma Chau Loop (into San Tin Technopole, 240 ha.), land for HKU (4 ha.) and CUHK (2.4 ha.) etc etc... more administrative wastage?

d) continued low private resi supply (c. 10k units/yr for 10 yrs) - luxury prices may be even better supported. but public and related housing get big boost

e) at the same time more forceful administrative power over private property (eg. 700 ha. to be resumed in next few years, vs 20 ha. in past 5yrs; standard rates of land premium; reforming Tso/Tong land revitalisatoin - ie lower decision making thresholds; lower compulsory sale thresholds for easier URA regeneration projects),

f) more development in Tuen Mun (220ha. planning with reclamation in Lung Kwu Tan, see art. 90), and industrial revitalisation policy extended to 2024

To sum it up for investment angle:

1) north NT major boost but need to do your own work to find where the good spots are; compulsory resumption may or may not work in your favour.

2) commercial/industrial better investment than residential given deep price corrections, higher yields, and also lower relative supply (vs residential) going forward;

3) get out of low end small units housing, supply will explode; luxury will be fine (ie no more middle class, oops)

------------------------extract of relevant speech bits-----------------------

23. The Northern Metropolis encompasses the mature new towns in Tin Shui Wai, Yuen Long and Fanling/Sheung Shui and their neighbouring rural areas, as well as ...Kwu Tung North/Fanling North, Hung Shui Kiu/Ha Tsuen, Yuen Long South, San Tin/Lok Ma Chau, Man Kam To and the New Territories North New Town. ...With as many as seven land-based boundary control points, the Northern Metropolis will be the most important area in Hong Kong that facilitates our development integration with Shenzhen and connection with the GBA. Under the Development Strategy, the proposed individual development projects together with the surrounding rural and conservation areas will be integrated in an innovative and organic manner conducive to upgrading the entire region to a metropolitan area. ...

​

Transport Infrastructure-led Development

26. ...The railway projects proposed in the Development Strategy include:

1. constructing the Hong Kong-Shenzhen Western Railway linking up Hung Shui Kiu/Ha Tsuen and Qianhai of Shenzhen;
2. extending the Northern Link, which is being planned, northwards to connect to the new Huanggang Port in Shenzhen via the Hong Kong-Shenzhen Innovation and Technology Park (HSITP) in the Lok Ma Chau Loop (the Loop);
3. exploring the extension of the East Rail Line to Luohu, Shenzhen ...provision of a new railway station for non-boundary crossing service between the existing Lo Wu Station and the Sheung Shui Station, with a view to unleashing the development potential around Lo Wu/Man Kam To and Sheung Shui North;
4. extending the Northern Link eastwards from the Kwu Tung Station to connect with the areas of Lo Wu, Man Kam To and Heung Yuen Wai, and further southwards to Fanling via Ta Kwu Ling and Queen’s Hill; and
5. ...automated people mover system from Tsim Bei Tsui to Pak Nai to promote the development of the area and Lau Fau Shan.

28. ...The Development Strategy suggests that Hong Kong should leverage this opportunity to upgrade Hung Shui Kiu/Ha Tsuen and make it the New Territories North Modern Services Centre, and to build sizable landmark I&T facilities in Lau Fau Shan facing Qianhai on the other side of the Shenzhen Bay, to provide enormous job opportunities in the Northern Metropolis. ...select, as far as possible, the Northern Metropolis as the location for government facilities and offices which are “non-location-bound and employment-driven”.

Increasing Land Supply for Housing

30. ...Upon the full development of the entire Northern Metropolis, a total of 905 000 to 926 000 residential units, including the existing 390 000 residential units in Yuen Long District and North District, will be available to accommodate a population of about 2.5 million. The total number of jobs in the Metropolis will increase substantially from 116 000 at present to about 650 000, including 150 000 I&T-related jobs.

84. On private housing, including railway property developments, ...sites for the production of about 100 000 units

89. ...Over the past two years, the Government has resumed 90 hectares of land in the New Territories for development by applying the Lands Resumption Ordinance, much more than the 20 hectares of land resumed over the past five years. Looking ahead, as many as 700 hectares of land is expected to be resumed by the Government in the coming few years.

90. DEVB will conduct studies on the Lung Kwu Tan reclamation (about 220 hectares) and the re-planning of Tuen Mun West area (about 220 hectares).

93. ...extending the implementation period of two existing measures for revitalising industrial buildings to October 2024, which include relaxing the plot ratio for redevelopment of old industrial buildings and exempting the waiver fees chargeable for wholesale conversion.

105. ...explore ways to lower the compulsory sale thresholds under the Land (Compulsory Sale for Redevelopment) Ordinance to expedite redevelopment of aged buildings.

Is it time to buy HK retail property yet? 20210921

 

Stand news 20210917

In the past two years, the retail market has been decimated by first the domestic protests and then by the global lockdowns.

One of the prime victims of this combination of circumstances has been retail properties of Hong Kong, where rents have fallen some 14% from the 2019 peak, and is still down 8.9% even now (blue line in Chart 1). The drop in retail property prices were even more pronounced, down 17% peak to trough and now standing at 13% off the 2019 highs (red line in Chart 1).

Anecdotal reports of drops of 70-80% in prime street shop rents have also been common, indicating that formerly tourist hotspots have been far worse hit than the overall indices suggest.

Chart 1: Retail rents up 4x vs price surging 29x since 1984

Looking further back in time, however, both rents and prices have risen by multiples over recent decades, so the question remains – are these mere single-digit drops, which take us back to levels 7-8 years ago, enough of a correction for the current downturn?

 

Consumption drives rents, but interest rates hold sway of prices

To explain the rise in retail property prices, we plotted on the same chart the various components that contribute to prices: a) retail sales (very dark area, Chart 2); b) domestic consumption beyond pure retail (dark area); c) change in property yields (light area); and finally d) financing costs as represented by mortgage rates (very light area):

Chart 2: bulk of price increase driven by yield compression   Chart 3: PRC shoppers drove 03-12 run up in retail, which reversed big time after 2019

It is clear from Chart 2 that the bulk of the contribution to retail price increases were yield compression, 4.2x the magnitude contributed by domestic consumption, but yields did not follow mortgage rate’s falls which would otherwise have doubled again the net impact on retail property prices. To view the various value drivers in a logarithmic view (all exponentially rising value series are best viewed this way ), the yield compression component remains highly significant (see Chart 3).

What Chart 3 also makes clear is how retail sales as a top line driver was boosted by opening of the PRC independent travel market in 2003, which propelled retail sales to almost equal total domestic consumption by 2012. However, this factor fell away rapidly after the 2019 protests and then the lockdowns in 2020. The changed retail habits in the lockdown era also decimated retail and pushed a lot of shopping activity online, which explains the widening gap between consumption and retail in the chart.

Rental underperformance compensated by drastic yield compression

In Chart 2 above, the difference between price (red line) and the yield compression implied price (top of light area) must be explained by rental not keeping up with increases in top line consumption takes. This kind of makes sense, as not all domestic consumption activities take place in retail premises – eg services, as well as online sales, take place in office or industrial space, or increasingly nowadays, in data centres, which are calculated under office/industrial rents but not retail rents.

Another way to illustrate this divergence is shown below:

Chart 4: retail rent tracks retail sales, but not consumption

Here the rent index (purple line) tracks retail sales (blue line) very closely, proving that retail rent does indeed shadow retail specific activities and very little else – the fact they almost entirely overlap for almost all of the past three decades is impressive, and echoes our analysis above that rent has underperformed consumption (here represented by orange line) at large.

 

Retail property price – bit more rebound, then another leg down?

In our assessment, the current favourable tailwind of low interest rates and rental rebound from deep lockdown lows may peter out by late Q4 21 or early Q1 22, resulting in a topping out of retail property price growth by then:

Chart 5: Retail price likely to grow into end-21 before declining again as interest rates are likely to spike into 2023

Retail a safer bet than HK resi?

Despite possible bearish outcomes, retail property prices may still be in safer territory than HK residential for these reasons:

a) the lifting of lockdowns brings back PRC visitors, which will benefit foot traffic and retail rents more than residential rents;

b) the ability by PRC buyers to purchase HK flats has not evaporated as severely as retail spending in the past two years, thus will see less rebound post reopening;

c) HK’s high finance sector salaries that has sustained high residential rents may not see as much upside going forward (eg when interest rates rise and negatively impacting finance related incomes); and

d) residential yields are at historic lows and could expand even more than retail yields (blue area in Chart 6). These factors combine to provide more safety margin for retail property prices than residential prices, ie retail prices will likely outperform in the next year or two (red arrow in Chart 6):

Chart 6: Investing in retail properties seem to be a better decision than residential properties.

The ultra low yields in HK will be a big headwind to strong price appreciations ahead, especially in view of the lowest interest rates in all human history, coupled with a worldwide inflationary wave. Even so, retail property does not seem the worse amongst the various subsectors in HK property, given its recent corrections.

 

 

 

The author would like to thank Samson Leung of Hong Kong Baptist University and Jacky Chau of The Chinese University of Hong Kong for assisting in data collection, analysis, and drafting this article.