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The HK Property Curbs Have Unintended 'Victims'

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  1. #1

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    The HK Property Curbs Have Unintended 'Victims'

    Probably better to think of gainers (gainers?) and losers as a result of government intervention. Not a plus mark for HK as an open market economy?
    http://www.cnbc.com/id/100394129

    Last edited by walkup; 22-01-2013 at 08:49 AM.

  2. #2

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    Hmm.. feels like I read this before. Didn't this same pilot get interviewed by the scmp?


  3. #3

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    Quote Originally Posted by BryanL:
    Hmm.. feels like I read this before. Didn't this same pilot get interviewed by the scmp?
    http://www.scmp.com/property/hong-ko...minate-against

    "
    Foreigners living and working in Home Kong, who are not permanent residents, say new property measures discriminate against them

    Disgruntled expatriates living and working in Hong Kong believe they have become collateral victims of government measures aimed at curbing demand for property from mainland buyers.

    "It has basically kicked us off the property ladder," said Chris Lane. "They are discriminating against all the people who live and work here, and want to buy their own home and don't want to rent," said Lane, a California-born property agent who specialises in selling overseas properties to Hongkongers.

    He is a keen property investor himself. He and his wife, Karen, have a two-year-old daughter, Bailyanna, and have been looking for bigger space in the city.

    An American hedge fund manager said: "It seems they are following the Singapore model, which is not a good model." The fund manager owns a property he is worried that he cannot sell because he can't get as attractive a mortgage on his next purchase.

    "It seems like such a bad policy when you're trying to attract wealth and wealthy people to live and bank in your city. This is a slap in the face," he said.

    Some investors see it as outright discrimination, something Hong Kong has not resorted to in the past.

    "It's not a good situation to be in if you're a foreigner," said Danny Lim, an Indonesian-born, Australian-raised investor who runs the property fund manager The Creations Group.

    "I think they should repeal the measure or apply it across the board. It doesn't seem fair. It's going to have unintended effects, for expats and so forth."

    An Australian pilot based in Hong Kong says he and his wife, who were about to settle on a property just before the new stamp duty was introduced, have been talking about returning to Australia because they can't get on the property ladder here. Neither are permanent residents.

    The target of the expatriate ire is a special additional stamp duty of 15 per cent on purchases by corporate and non-permanent-resident buyers. The tax was among measures announced on October 29 and was widely understood to target mainland buyers who were blamed for putting Hong Kong home prices beyond the reach of a growing number of local buyers.

    The government also raised by 5 percentage points a special stamp duty on sellers that was introduced two years ago to curb speculation, and extended its effect on resales from two to three years. The rates now range from 10 to 20 per cent.

    The expat pilot said he felt that any advantage to be gained by coming to work in Hong Kong was gone, and the government needed to understand that if it wanted to attract top professionals such as pilots, investment bankers, hedge-fund managers, accountants and lawyers, it should ensure they did not feel they were outcasts and discriminated against by official policy.

    "Hong Kong is slowly becoming a mainland city. Expats are going to become a minority in terms of attention," he warned.

    Naomi Reidy, an agent who works for Nest Property in Hollywood Road, said she had seen a drastic decline in expat interest since the October 29 measures. "People have just dropped off the face of the market," she said. "With the special stamp duty you've got to have HK$3 million just to buy a shoebox."

    Another consequence that the government had not likely considered, brokers say, is that rents have shot up because a certain portion of the buying population have been forced to continue to lease.

    A 700 sq ft, single-floor apartment in Sai Kung, a popular getaway, used to go for HK$10,000 a month two or three years ago, Reidy said. Now a duplex in the same area starts at HK$35,000, and landlords will not budge on the price.

    "I think something has to give," Reidy said. "I don't think the government should be encouraged to make another decision like that one. It came out of the blue. It knocks you for six."

    The new rules are widely viewed as being aimed at mainland buyers, who have flooded the city with cash in a search for prestige property and who are often searching for a safe offshore haven for their money.

    Although the measures may not have explicitly targeted mainland buyers, they have adversely impacted on other prospective buyers who are not permanent residents. Many agents say plenty of mainland buyers have enough cash to bring over in suitcases and buy Hong Kong property outright, putting them beyond the reach of the new rules.

    Now expatriates complain that the measures will have the unintended consequence of penalising investments by professional workers in the city, and drive them away from Hong Kong. Would Hong Kong take the same kind of steps if the stock market went through the roof, they asked?

    "The government is now cracking down on what used to be a free market. I think they made a drastic decision," said Lane, who is now looking to invest in property elsewhere."
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  4. #4

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    "Hong Kong is slowly becoming a mainland city. Expats are going to become a minority in terms of attention," he warned.

    Thought that was a weird statement. Of course expats should be a minority in terms of attention because they are only a minority.


  5. #5

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    Did I miss something, or are all of the people quoted in vastly privileged positions compared to the majority of the HK population or are professionally exploiting an overheated property market? At a quick count, there are two or three professional property investors, a pilot, and a hedge fund manager.

    If that was the full extent of the article, then the writer deserves a kick up the backside for choosing such a skewed group to talk to. There are plenty of expats with a bit more of a moral leg to stand on.

    Last edited by jgl; 22-01-2013 at 10:50 AM.
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  6. #6

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    Quote Originally Posted by pin:
    [

    A 700 sq ft, single-floor apartment in Sai Kung, a popular getaway, used to go for HK$10,000 a month two or three years ago, Reidy said. Now a duplex in the same area starts at HK$35,000, and landlords will not budge on the price.

    "
    this compares what? an apple to an orange?

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    "The couple owns a 1,100 square foot apartment in Quarry Bay, a middle-class neighborhood on the east side of Hong Kong island, but the new tax makes it practically impossible for them to upgrade."

    Oh no, these poor people, how can they go on living this way!


  8. #8

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    Quote Originally Posted by Gatts:
    "The couple owns a 1,100 square foot apartment in Quarry Bay, a middle-class neighborhood on the east side of Hong Kong island, but the new tax makes it practically impossible for them to upgrade."

    Oh no, these poor people, how can they go on living this way!
    I think we should start a geoexpat charity for all the poor expats of Quarry Bay doomed to a life of scraping away in an 1100 sq ft apartment. Anyone else remember poor old Bougainville who was stuck in a 5 star hotel?
    dear giant and drumbrake like this.

  9. #9

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    Quote Originally Posted by Gatts:
    "The couple owns a 1,100 square foot apartment in Quarry Bay, a middle-class neighborhood on the east side of Hong Kong island, but the new tax makes it practically impossible for them to upgrade."

    Oh no, these poor people, how can they go on living this way!
    Only in HK would they be perceived like that....
    dear giant likes this.

  10. #10

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    Quote Originally Posted by Gatts:
    "The couple owns a 1,100 square foot apartment in Quarry Bay, a middle-class neighborhood on the east side of Hong Kong island, but the new tax makes it practically impossible for them to upgrade."

    Oh no, these poor people, how can they go on living this way!
    Only in HK would they be perceived that way..

    O

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