I wonder why you are not discussing REITs. I think they are better than directly owning investment properties. If you look at Link Reit or Sunlight (0435) or Fortune (0778), they have gone up as much as properties, while giving a higher yield and you don't need to worry about a tenant, renovations, etc. (and no agent to pay).
Link is a bit of an unusual case because they got a lot of undervalued properties, renovated them and spiked rents to impossible levels. Sunlight might be more representative of the potential of reits.
Over the last 10 years::
Centacity index up 200%
Fortune up 236%
Sunlight up 275%
Link Reit up 630%
Another advantage is that it's more responsive to price swings, so you can buy some if the price drops (momentarily). I read that June was the top price for properties, but the Centacity index has hardly moved, while Sunlight has gone down by 15% since 15 July, Fortune by 14%, and Link by 5%.
Of course if you buy a house you can easily leverage, but with a revenue of 2.5% and a mortgage interest rate of 2.3% it doesn't make much sense. And the yield of these reits is much higher than that of properties: That of Link isn't very high (2.92%), but Sunlight is 4.94% and Fortune is 5.47%. Good luck finding that with a property in HK. Also, you don't need to pay taxes on the dividend, but you need to pay taxes on the rent of investment properties, right?
I have recently found what seems to be a good REIT ETF in USA: RQI, although perhaps a bit pricey right now? It's up 180% since 2009, and it has a dividend of 4.5% (after taxes), with monthly distribution. Tell me what you think !
Of course companies pay taxes, but I mean that the dividend you receive isn't taxed, while I believe the rent you receive is taxed. You should take this into consideration when you compare yields.Original Post Deleted
Of course location and being available is key as well. Whereas a REIT you can buy it and keep hands off. I think the returns for REITs would not match if you bought an investment property yourself. Yet REITs are more liquid than physical property.
I'll have a read then. I'm skepticalOriginal Post Deleted
REITS are regulated not only under the HKEX listing rules but under the SFC Code on REITS. Among other requirements is one that they are required to distribute 90% of their annual net profit after tax to unit holders (REIT Code paragraph 7.12). The Trust Deed will define "net profit" in a manner which better aligns the term with cash flow rather than accounting profit.Original Post Deleted
I actually worked on several of the early REITs in my professional capacity so not going very far at all - no further than my memory of deals past. Unfortunately, it meant I was barred from investing in them.Original Post Deleted