HK Home Compulsory Purchase - Any Knowledge?

[ArrynField]

You’ll find that you might find opportunities, but you really need to be buddies with a good agent.

Most owners in an old building could be anywhere. Some might be elderly, some might have emigrated to UK,, Europe, USA etc, hence the difficulty in finding 80% of owners.

Companies such as Richfield and Mainland property development companies have been involved in many redevelopment projects and they are always targeting prospective buildings and landlords. They are also very close with all the real estate agents, hence they are likely to get first dabs on any deal, way before you hear about it and they can act very quickly.. Hence, in reality there are very few opportunities.

[Sage]

My experience from a slightly different perspective.

I own and live in an apartment which is around 30-40 years old now.
People who live in the building have lived in it a long time - only two flats per floor.
3-4 years ago, apparently a developer was making enquiries. I was open to selling, but it never got to the stage of them actually making me an offer. Other owners told me that while the price was slightly above the going rate for the building, the price offered would not have been enough to buy a comparable apartment in the same area, let alone compensate for the the hassle of having to move house.

Clearly it's the URA one would want to be approached by, I guess the chances of that aren't great.

They appear to have 77 projects on the go currently and I read somewhere there are 4000 bldgs over 50 years old in HK - However many of their projects do involve the purchase of multiple buildings.

[Sage]

You’ll find that you might find opportunities, but you really need to be buddies with a good agent.

Most owners in an old building could be anywhere. Some might be elderly, some might have emigrated to UK,, Europe, USA etc, hence the difficulty in finding 80% of owners.

Companies such as Richfield and Mainland property development companies have been involved in many redevelopment projects and they are always targeting prospective buildings and landlords. They are also very close with all the real estate agents, hence they are likely to get first dabs on any deal, way before you hear about it and they can act very quickly.. Hence, in reality there are very few opportunities.

I guess, as with all investments, it's tough competing with the big boys. I am familiar with the cozy relationship buyers have with agents and without an appetite for multiple properties you're very unlikely to ever get the inside track on the best chances - But this is also true for everyone buying an apartment in HK for any purpose, the question is, can you still find a 2nd tier deal that's still attractive enough for your objectives....

[traineeinvestor]

This is very interesting, thanks

Can I ask a few questions about your situation?

1) When you bought the unit in question did you do it partly/wholly with the thought that it might be a target for redevelopment in future?
2) How long have you held it and when did the redevelopment enquiries occur relative to the amount of time you've owned it?
3) What were the offer prices like compared to the market at the time?
4) Would you have accepted their offer if the 80% was achieved?

Many thanks

Going from my memory (which Mrs Traineeinvestor regularly assures me is selectively defective):

1. I purchased shortly after SARS so probably around 2004. In spite of it's age the building was well maintained, came with a carport and had better ceiling height than most of the other properties I looked at at the time. Purchased as a long term investment

2. The first offer was shortly before the GFC and the second one a few years after. The first offer didn't get much traction – it wasn't enough to allow people to sell and buy a place with the same area in a newer/better building. Now that I think about it, the second offer only got as far as the developer doing a presentation to the annual meeting of owners

3. the first offer was above bank valuation but not by enough to enable the owners to buy into a newer flat of the same size

4. given #3, I would be unlikely to have accepted the offer. There's no point in selling unless you were either looking to exit the investment anyway or you get enough to buy something better. With double stamp duty in place, this is actually harder now than it used to be. Of course, if the developer gets to 80% they can force the rest of us to accept whether we want to or not

[chuckster007]

Instead, they paid her 35 months rent compensation to move out.

Damm, she hit a Jackpot there lol How long did it take for them to pay her.

[Sage]

Damm, she hit a Jackpot there lol How long did it take for them to pay her.

Indeed a great Christmas present! But modest compared with the windfall her landlord got.

The whole process, from first being notified of their intent to moving out took about 9 months, but once agreed on the compensation and accepted (Sept) she moved out at the end of Dec. She was paid about 25% at acceptance and the remaining 75% within a week of handing over the keys at the end of Dec.

The URA became her landlord for those last few months and so she paid her normal rent to them for that period and they were pretty flexible about when she moved out exactly.

However, as the property is being demolished, I've helped her strip it, and sell literally everything in it early this year even after officially handed back - All the furniture, the light switches, fittings, boiler, induction hob, doors etc etc.

The URA really is transparent about the compensation they offer - this summary is prominently displayed on their website....Lazy Pack Eng Ver May20 2 7.pdf

[Sage]

Going from my memory (which Mrs Traineeinvestor regularly assures me is selectively defective):

1. I purchased shortly after SARS so probably around 2004. In spite of it's age the building was well maintained, came with a carport and had better ceiling height than most of the other properties I looked at at the time. Purchased as a long term investment

2. The first offer was shortly before the GFC and the second one a few years after. The first offer didn't get much traction – it wasn't enough to allow people to sell and buy a place with the same area in a newer/better building. Now that I think about it, the second offer only got as far as the developer doing a presentation to the annual meeting of owners

3. the first offer was above bank valuation but not by enough to enable the owners to buy into a newer flat of the same size

4. given #3, I would be unlikely to have accepted the offer. There's no point in selling unless you were either looking to exit the investment anyway or you get enough to buy something better. With double stamp duty in place, this is actually harder now than it used to be. Of course, if the developer gets to 80% they can force the rest of us to accept whether we want to or not

Thanks for taking the time to explain, that's good to know. In our situation we have 2 PR ID's and one HK property so have the opportunity to get another for minimal (relatively) transaction fees.

If we did go ahead sub 10m would be the way to go, though I do wonder about the govt further easing mortgage caps on properties above 10m which would no doubt have the effect of boosting prices in that segment and suppressing further price rises in the sub 10m bracket.

[traineeinvestor]

Thanks for taking the time to explain, that's good to know. In our situation we have 2 PR ID's and one HK property so have the opportunity to get another for minimal (relatively) transaction fees.

If we did go ahead sub 10m would be the way to go, though I do wonder about the govt further easing mortgage caps on properties above 10m which would no doubt have the effect of boosting prices in that segment and suppressing further price rises in the sub 10m bracket.

Is the one HK property in only one of your names or in joint names?

[Sage]

In my name only, hence we have one 'clean' ID.

Is the one HK property in only one of your names or in joint names?