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HK Island vs Kowloon - where to live ??

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  1. #31
    Mat
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    but I agree that assets can totally be overpriced, no doubt about that

    as for bubble in HK I would say YES in SOME places and for SOME segment of the market but not the entire market.


  2. #32

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    Quote Originally Posted by Mat
    Many ppl bought in 97, prices fell, ppl said they were crazy to have bought. Some are now selling over the price they bought 13 years ago.

    you might argue 13 years is a long time of course but this will, once again be relative to everyone's position.
    Some assets never recover their valuations. Florida swampland, Dutch tulip bulbs and bust dot.com tech companies are three examples. Houses are being knocked down in former coal mining towns in England and the same in Detroit. They lost a lot of money for someone.

    Couldn't happen here? Maybe - until Shanghai supersedes Hong Kong as the financial centre for China. Will this happen? Probably not. Could this happen? Definitely.

    You also need to factor in the opportunity cost of capital and the constraints of tied to a property you can't sell (negative equity). In 1997 would you have been better investing in bonds, property or equities?

    Quote Originally Posted by Mat
    The wrong time to enter the market will be depending on when you exit it......
    Only if you look at it on a very simple basis and ignore alternative investments. If I sunk $3 million into an apartment here and sell it for $4 million in ten years time then I have made a handy profit. However, if I have foregone the chance to invest in markets which have tripled in that time then I have made a pretty poor decision.

  3. #33
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    Quote Originally Posted by TheBrit
    Some assets never recover their valuations. Florida swampland, Dutch tulip bulbs and bust dot.com tech companies are three examples. Houses are being knocked down in former coal mining towns in England and the same in Detroit. They lost a lot of money for someone.

    Couldn't happen here? Maybe - until Shanghai supersedes Hong Kong as the financial centre for China. Will this happen? Probably not. Could this happen? Definitely.

    You also need to factor in the opportunity cost of capital and the constraints of tied to a property you can't sell (negative equity). In 1997 would you have been better investing in bonds, property or equities?



    Only if you look at it on a very simple basis and ignore alternative investments. If I sunk $3 million into an apartment here and sell it for $4 million in ten years time then I have made a handy profit. However, if I have foregone the chance to invest in markets which have tripled in that time then I have made a pretty poor decision.
    Agree but again that is IF the market triple IF you made the right investment....IF IF IF

    There is NO right or wrong investment, ppl make money buying and selling stocks, ppl make money buying selling properties, ppl make money marrying a rich man/woman, winning the mark six, creating a company....at the end of the day what you are comfortable with (obviously stocks for you) is not necessarily what other are comfortable with.

    I agree prices are high now but as mentionned earlier NOT all prices and NOT everywhere.

  4. #34

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    Quote Originally Posted by Mat
    There is NO right or wrong investment, ppl make money buying and selling stocks, ppl make money buying selling properties, ppl make money marrying a rich man/woman, winning the mark six, creating a company....at the end of the day what you are comfortable with (obviously stocks for you) is not necessarily what other are comfortable with.
    Ahh, you are confusing speculation with investment. I agree anyone can make money speculating on price appreciation, betting black at one of SJM's casinos or playing Mark 6. Buying a property and looking to re-sell it 20% higher in 18 months time? Even though the rental yield is 2%? You're relying on the Greater Fool theory and that's speculation every time.

    Would be interested in your analysis of which segments offer good value at the moment.

  5. #35
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    Quote Originally Posted by TheBrit
    Ahh, you are confusing speculation with investment. I agree anyone can make money speculating on price appreciation, betting black at one of SJM's casinos or playing Mark 6. Buying a property and looking to re-sell it 20% higher in 18 months time? Even though the rental yield is 2%? You're relying on the Greater Fool theory and that's speculation every time.

    Would be interested in your analysis of which segments offer good value at the moment.
    I am not confusing anything, I just do not like when ppl come on here always bringing affirmative statements while the reality is always more complex than this, that's it.

    So basically trying to soften yours or some other ppl very strong position: there is a bubble, there is no bubble, Stocks are better, properties are better....arf.

    Who said here that they wanted to : "Buying a property and looking to re-sell it 20% higher in 18 months time? Even though the rental yield is 2%"...again do not throw numbers like that to make your point, it only weakens it.

    You like stocks and you seem obviously good at it, good. And I repeat again, yes in HK properties are high at the moment, they were also a year ago and 2 years ago.

    Comparing HK vs UK on the other hand, not very realistic. ppl here have a very different "relationship" with properties than they have in Europe.

  6. #36
    Mat
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    Quote Originally Posted by TheBrit

    Would be interested in your analysis of which segments offer good value at the moment.
    There are still some areas in the NT well below the 97 prices (i.e. some are still 50% below) and still very price acceptable (for the size/location/quality of the building)

    HK Island is well above what it should be (especially the luxury market). Kowloon is getting very expensive for what it is.

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    I have no particular preference for stocks. I own corporate bonds and property as well as stocks - I even own some gold related plays. I used to own some Government bonds (through pooled funds) too but sold those last year on valuation grounds.

    For your nt examples, you don't give any valuation information to support your view... I am not saying you are wrong but unless we try to establish an economic framework for an investment it is impossible to say whether it is above or below that value.

    Quote Originally Posted by Mat
    There are still some areas in the NT well below the 97 prices (i.e. some are still 50% below) and still very price acceptable (for the size/location/quality of the building)

    HK Island is well above what it should be (especially the luxury market). Kowloon is getting very expensive for what it is.
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  8. #38
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    Quote Originally Posted by TheBrit
    I have no particular preference for stocks. I own corporate bonds and property as well as stocks - I even own some gold related plays. I used to own some Government bonds (through pooled funds) too but sold those last year on valuation grounds.

    For your nt examples, you don't give any valuation information to support your view... I am not saying you are wrong but unless we try to establish an economic framework for an investment it is impossible to say whether it is above or below that value.


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    Not asking you how much you make or how much you own but....

    Wont give exact location but visited some flats a while ago and:
    +900 sqf, 13 to 15 y old properties so not old, excellent developer (loved by Chinese), pool and facilities. Price per sqf was around 3.500/3.200 - at the peak in 97 price per sqf was about 6.000, at the bottom (ie Sars) prices were around 2.200/2.500 sqf. so yes given the economic context, the quality of the flats and the current interests rates, those assets are not overly priced. AND btw those are not far from Central (~35/40 min max).

    There are also buildings known for their stability (ie few ppl selling and few ppl buying) and where the prices do go up and down but at a much more moderate pace than ine popular estates.
    Last edited by Mat; 05-01-2011 at 07:30 AM.

  9. #39

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    Why are you trying to keep it a secret? It is hard to objectively assess anything if it's a secret! I can make up all kinds of investments if I keep them a secret. I am not saying you are making these up but how can we be sure?

    By the way, you say that is no such thing as a bad investment - buying those properties in 1997 which are still worth about half of what you paid, 13 years later - that doesn't sound like a terrible investment to you?


  10. #40

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    Quote Originally Posted by TheBrit
    Well, markets are generally forwards looking rather than backwards looking. The most common ways to value stocks are discounted future cash flow analysis or shortcuts like EV/EBIDTA and price/forward earnings. I am not interested in what cash flows accrued to the PREVIOUS owners of this stock, I am interested in what cash flows accrue to the CURRENT owners of the stock. I don't care if Kodak made $Xbn in the last decade selling photo film that has been superseded by digital cameras... I care about the future, not the past.

    Additionally, casino stocks are generally valued on EV/EBITDA basis, to allow for differences in the capital structure of the companies.

    Industry factors (the surge in Mainland visitors, the expansion of the working capital of "junkets") and company specific factors (a restructuring of the operating fees from subsidiaries) have all led to a large increase in earnings for SJM).

    On a forward earnings basis, SJM is on about 18x 2011 EPS estimates. It is on about 13x EV/EBITDA. I would say these are not yet bubble territory, but I would tend to be more of a seller than a buyer here. There might be more upside, but the risk/reward isn't as compelling as it was when I brought it at 4 HKD. One good reason that valuation is the key to investing.

    OK, I have answered your questions - will you answer mine? Are there prices at which any asset makes no economic sense? If SJM goes to 100 times future earnings or 30x EV/EBITDA for an earnings yield of 1% I would have no hesitation in saying it is completely overvalued rather than looking pretty overvalued.
    Thanks for the investment analysis lesson, and especially for bolding future cash flow analysis as I guess that is a truly novel concept to many of us.

    So, do I buy, hold or go short SJM today? Quick, the market opens soon ...

    Regarding your question about asset prices, Yes - there is never ever, ever a price too high to pay for any asset. Is that the answer you wanted? Give us a break. Don't confuse questions that have obvious answers with useful contributions.

    No one disagrees with your platitudes. It's the ability to make decisions based on what you're saying that's difficult. Anyone can talk endlessly about these things and rely on financial jargon to confuse/impress others. It's putting your conclusions into action that's hard.

    What I want to know is what is your advice on what we should be doing right now in light of your insights about property and share prices in Hong Kong? Should we be acting, waiting or something else?

    For some of us, these are livelihood issues, not merely rhetorical amusements that add/subtract a little something to our paychecks each month.

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