Your real estate purchase in HKG

[Gurkcutter]

ok at the moment I´m looking around to buy an apartment in hong kong. currently I´m renting, but I want to change that soon.

so here are my questions:

when did you girls and guys bought your place? after the first 2 years or earlyer?

how much did you spent and what kind of size and location do you have?

have you had a lot of money before that which you put down?

how big was the downpayment in percentage?

did you renovate?

would be nice if you can give me some facts and some description of the deal.
for example, I recently looked at a place like that:

3,5M hkd
mid-levels, 28th floor with private roof top
build 1994, needs a little renovation
550 gross area

I would really appreciate some insights!
thank you

[dragon501]

One thing before you jump into buying a roof top appartment.... I know NOBODY who has a roof which doesnt leak....... Just a word of caution there...
I personally think buying cheap is good for the first one... Lots of 'paying off' on the allowance... You can get a 95% mortgage and reno for something that size should not cost more than 250k. If you spend more you are ripped off (don't go for a western contractor bla bla... He might save you hassle but that will cost you double.....) This is unless you want Italian design kitchen etc.....
Don't forget that the banks value a place regardless of what it looks like (within limits that is...)
Check if there have been death or incidents there cos the Chines will NOT touch it. There are unofficial sites I just read in the SCMP, you can also ask the bank/agent.
If you can no number 4 or 40 or whatever (sounds like 'death' in Chinese) and no view on the graveyard(difficult in Midlevels I know)
All in all.... Don't let any agent push or rush you into something with the "There are other people interested who want to make an offer" bla bla bla.... Especially for the price range you looking for there is PLENTY optionssss
Good luck.

PS. The options are small however size wise ;-) ;-) Im used to it now... Takes some time ;-)))))

[FlexibleResponse]

If you buy in Hong Kong you will automatically become an economic conscript to the company that employs you in Hong Kong.

If you lose your job (aka the 49ers) or need to change jobs quickly you might find the property will bankrupt you or hobble your movement away from Hong Kong severely.

On the other hand, historically, in the long run Hong Kong property has rewarded most of those who have taken the plunge.

[Gurkcutter]

thank you very much for you replies!

the landlord of that apartment is chinese and he is living by himself there, so I guess the are no "chinese" problems.

good point with the leaking, I have not thought about that, but on first sight it looked ok.

the 10% down payment are also no problem because I have the money.

how long does it take to pay the 3,5M off with all the interests and fees?

I think 3,5M is the maximum for the first apartment, otherwise to many risks. what do you think?

but I wonder about one thing: if I buy and I´m doing the renovation where can I live? because I believe you need to move out of the lease apartment as soon as you buy something? or do you get a transition period??

[spleener]

Gc ; Bought/sold/ renovated a number of HK properties [6] over the years. Including perhaps the '97 bubble it has always been a good time to buy [time heals negative equity]. In any case, the company allowance is better in your pocket than a landlords!
It's not brain surgery...
Finance: Any banks website has tools which will point you in the right direction, then have a chat to your local loans manager. Some banks have different criteria depending on building age+repayment period, housing type [BOC for village houses...] The Sharks/agents usually have some tame banking contacts.
Transition period: er, no.
Renovation: If you don't want to live in a hovel, you may over capitalise, but hey, you pays your money etc. BTW, rooftops CAN be waterproof 10yrs+ if done properly $$.

[Numero Crunchero]

gurk, things to think about.

1 Two types of dead money....rent and interest!
2 At the moment you can rent more than you can buy
3 Renting ties you up short term, buying ties you up long term.

Ok..to explain...1. All rent is dead money. So is INTEREST to a bank and all management fees and government rates and rent. If I rented a place for $35K per month that is like buying a place for close to $50K per month! Why? Well when you buy for 50 you pay tax, government rates and rent. So out of the 50K you would lose around $8K to tax and another $5-7 for rates/gov rent etc. So you would end up with around $35K left. If you could get an interest only loan, $35K per month would finance a $8M loan at say 5%.

2 You could buy an $8M place(assuming you could do 100% financing) for $35K per month. If you rented instead you could get a house 40% bigger or better or better located because your limit is around $50K. As a CN you can rent for up to $80K but can still only purchase for $50K. So I get more than double the house by renting than I could buying. Rentals on houses are less than 5% at the moment so it is cheaper to rent than to buy ignoring tax, owner costs etc.

3 If you rent, the longest you are tied into hkg is 14months...until the escape clause. If you buy then you are subject to market conditions. I remember hearing that a 49er paid close to hk$5M for a flat that was worth $1.8M when he was fired! As the financial advisers love to say...markets can move down as well as up.

Now putting all this in context, I did buy a few years ago but I am renting the place out. I didn't want my rental income and my employment income to come from the same source...too high risk for me! If you are single or married without kids, buy something cheap(and centrally located for easier future sale) for maybe 3-5M. If you have kids...buying may not being an option. What is the point of making moeny if your family is miserable.

hope this helps

[FairlieFlyer]

Great post Numero and agree completely. We did the sums and figured much better to rent and invest the difference.

Found a lot of brand new property around HK & DB which rental doesn't come remotely close to covering mortgage + rates + mgmt fees + Maint.

There may be potential capital gain but our view there are much better markets globally to spend money on property currently where the air is much cleaner... (Germany, Romania, Malaysia etc)

[MAX]

Sorry to crash this,

Have you figured in the 100k in interest you can claim against your tax?

Or arent CX employees elligible for this?

MAX:col:

[Numero Crunchero]

No as it is irrelevant and not necessarily permanent. It reduces your tax by $16K per annum if you live in the place and if you buy it in your name, not a company name. So in my example above, adjust the $35K to $36K to be more strictly correct. And also I said you would be 40% better off to rent than to buy but actually you would be about 38% better off. Thanks for correcting me on that. I hate getting the numbers wrong ;-)