Hong Kong Property Market? Think Twice Before You Leap
A breathtaking free-fall parachute jump from the 84th floor of Hong Kong's newest skyscraper, Two International Finance Center, is a centerpiece of the movie "Tomb Raider : The Cradle of Life," now playing around Asia. To audiences in Hong Kong's cinemas, the scene is rich in unintended irony.
To people in Hong Kong, the dizzying plunge by star Angelina Jolie -- or rather her stunt double -- from the top of the spanking-new Two IFC is a perfect metaphor for the state of the city's property market.
Prime office rents in Hong Kong have fallen by 66% since the commercial property market peaked in January 2001, according to property consultant Cushman & Wakefield. The situation in the residential market is scarcely better. The Centa-City index of residential prices has fallen by more than two-thirds since July 1997, dragging rents down with it.
But that hasn't stopped investors from buying the shares of Hong Kong's property developers. True, the property sector has diminished considerably in its importance to Hong Kong's equity market during the past six years, with property stocks dropping to just 10% of the total market's value from 27% in mid-1997.
Buttressed by strong balance sheets and healthy cash flow, developers' shares have attracted heavy buying in recent months. Between late April and early August, Hysan Development shares rose 41%, Sun Hung Kai Properties by 43% and Henderson Land Development by 48%. During the same period, Hong Kong's benchmark Hang Seng Index added 22%.
Yet investors should think twice before buying into Hong Kong property developers as a long-term investment. Though property prices and rents have dropped a long way from their peak, there is plenty of evidence that they have a lot further to fall.
The problem is massive oversupply and a woeful lack of demand. At the end of 2002, 10% of the Grade A office space in the downtown Central District stood empty. And even that figure understates the true extent of the surplus. Many companies are underutilizing the space they rent after recent job cuts, and are likely to cut back when they renegotiate their leases.
As if that weren't bad enough, the Two IFC development -- which with just a handful of tenants signed up is derided by some people in Hong Kong as "the world's tallest empty building" -- has added 185,000 square meters to the Central District's office glut, an additional 9% in one go. The extra office space has pushed vacancy levels in Central to nearly 20%, an all-time high, according to analysts at credit-rating agency Fitch Ratings.
Andy Yuen, a director at estate agent DTZ Debenham Tie Leung, one of the agents responsible for the 18 floors being leased out by Two IFC's ultimate owner, Hong Kong's MTR, vigorously rejects the "world's tallest empty building" tag. With the top 14 floors of the 88-story building sold to the Hong Kong Monetary Authority, and with the Financial Times and Nomura Holdings confirmed as tenants, he says 20% of the building is already spoken for. "Progress is slow," he concedes, "but it's better than we expected."
Clearly, though, the surplus of space in central Hong Kong will push rents even lower. Simon Keswick, chairman of Hong Kong Land, Central's largest landlord, conceded as much when releasing the company's interim report last month. "Further weakness is expected in the Hong Kong property market in the second half of the year as new developments continue to put pressure on values and rents," he warned, announcing a 13% decline in Hong Kong Land's first-half net profit compared with the same period last year.
Just how much further the market can deteriorate depends partly on Hong Kong's economic performance. But with the majority of economists predicting a mild recovery at best, researchers at property agent Colliers International forecast that rents will fall by between 12% and 20% from current levels during the next year before bottoming out. Adam Preece, head of corporate ratings for Asia at Fitch in Hong Kong, is even more negative, warning that rents could fall 40% in the coming two-year period.
The residential market, too, suffers from oversupply. Rampant overbuilding in the late 1990s left 74,000 flats empty at the end of 2002, equal to about 3% of the territory's total housing stock, or three years' worth of normal demand.
Yet building continues apace. Though the government has suspended land sales, an overhang of development land remains following grants from the government to the territory's two railway companies as an incentive for building new lines. With funding costs low, it makes sense for the developers to keep building, at least for the time being. Low mortgage rates mean an impressive takeup rate for new properties, and as long as there are buyers out there, the developers can maintain cash flow despite the poor market.
But it can't go on forever. Though the developers are, by and large, successful at selling new flats, demand is finite. With little speculative interest, new flat sales inevitably mean vacant old flats. Those vacancies depress the secondary market. As prices are pushed lower, more owners are forced into negative equity, in which the obligations of their mortgage exceed the value of their apartment. That will depress the prices for new apartments, eroding developers' margins. At the end of the day, earnings will suffer.
投资香港地产股仍需三思
眼下亚洲正在热映的《古墓丽影Ⅱ：生命摇篮》(Tomb Raider: The Cradle of Life)中有一个摄心动魄的镜头：女主角从香港最新落成的摩天大厦国际金融中心二期84楼乘降落伞自由降落。在香港观众的眼中，这个电影场景充满了不经意嘲讽的意味。
在香港人看来，影星安吉丽娜?朱丽(Angelina Jolie)从新落成的国际金融中心上令人目眩的一跳（或者是她的特技替身演员），是对香港地产市场的绝妙影射。
房地产咨询服务公司高纬物业(Cushman & Wakefield)称，自2001年1月香港商用楼宇市场达到巅峰以来，香港甲级商厦租金减少了66%。住宅楼宇市场的情形也好不了多少。住宅楼宇市场状况指标－中原城市指数(Centa-City index)自1997年以来已经下跌了三分之二强，租金也同步下滑。
但这没有阻止投资者买进香港地产发展商的股票。没错，过去6年地产类股在香港股市中的地位一落千丈，地产类股市值占整个股市市值的比例已经从1997年年中的27%下降到目前的10%。
受强劲的资产负债表和健康的现金流支撑，最近几月地产类股吸了引投资者的大量买盘。从4月底至8月初，希慎兴业有限公司(Hysan Development)股价上涨了41%，新鸿基地产发展有限公司(Sun Hung Kai Properties)股价上涨43%，恒基兆业地产有限公司(Henderson Land Development)股价上涨48%。同期香港基准恒生指数上涨22%。
不过投资者在作长期投资打算而买进香港地产股之前还是要三思而行。尽管地产价格和租金已经距顶峰有很大的距离，但多方证据表明它们还有继续下降的空间。
这是由于市场供应过剩，且需求不振。2002年年底，香港市中心中环的甲级商厦有10%闲置。即使是这个数字也不能充分表明供应过剩的实际前景。许多公司在最近的几次裁员之后又有更多的办公室闲置，它们可能会在重新商谈租金的时候退租部分办公室。
就像害怕情形还不够糟糕一样，国际金融中心二期又一口气在中环泛滥的写字楼群中新添了185,000平方米，占中环全部写字楼面积的9%。国际金融中心二期目前仅有少部分租户，被香港人讽喻为是…世界上最高的空楼"。惠誉国际评级(Fitch ratings)的分析师指出，国际金融中心二期使中环写字楼的空置率接近20%，达到有史以来的最高水平。
物业顾问戴德梁行(DTZ Debenham Tie Leung)的Andy Yuen十分反对…世界上最高空楼"的说法。戴德梁行负责国际金融中心二期(地铁部分)的联合独家租务代理。他说，香港金管局(Hong Kong Monetary Authority)购入最高的14层楼面，《金融时报》(Financial Times)和野村控股(Nomura Holdings)租用也是板上钉钉的事，已经20%的写字楼被订购。他承认，过程的确进展缓慢，但总比预料中的要好得多。
不管怎样，中环过剩的写字楼必将使租金更低。中环最大的地产发展商－香港置地(Hongkong Land)主席西门?凯瑟克(Simon Keswick)在上个月的中期报告中也承认这一点。他警告称，预计今年下半年香港地产市场将继续维持疲弱状态，因为新开发的地产项目对地产价值和租金构成了压力。香港置地今年上半年净利润较上年同期减少13%。
地产市场到底将糟糕到何种程度取决于香港经济。大多数经济学家预计香港经济最好只能取得温和复苏，高力国际物业服务有限公司(Colliers International)的研究员预计，每年香港写字楼租金最低将下降12%-20%。惠誉评级香港公司负责为公司评级的普里斯(Adam Preece)则更加悲观，他警告未来两年租金可能将下降40%。
住宅楼宇市场也深受供应过剩之苦。上个世纪90年代后期过度的建设使2002年底的闲置公寓达到74,000个，比例为3%左右，相当于3年的正常需求量。
然而建设还在加速。尽管政府已经暂停出售土地，但港府授予两家铁路公司建设楼盘的特权，以此作为对它们建设新铁路线路的鼓励。既然融资成本较低，开发商当然愿意继续盖楼，至少是在目前。抵押贷款低利率意味著有新项目有更多的买主，只要有买主，开发商就不愁现金流，哪怕地产市场不景气。
但这种想像不会一直这样下去。尽管总体上开发商成功地推销出了新公寓楼盘，但市场需求毕竟有限。市场投机地产的兴趣寡然，新公寓就意味著旧公寓的空置。由于价格一低再低，更多业主的抵押贷款还款金额超过公寓的价值，因而陷入负资产的窘境。这将压低新公寓的价格，开发商的利润率因而也将受损。最终利润也将减少。
