Tag Archives: Overseas Property

HK home sales plunge 70% from last year

The number of residential transactions in Hong Kong plunged by 70 percent on an annual basis last month, as buyers shunned the housing market amidst falling prices and economic uncertainty, reported Bloomberg.

According to government data, only 1,807 units were sold in February compared to 2,045 in the previous month. This is a far cry from the 6,027 transactions recorded during the same period last year.

“The newspapers keep on saying the market is going down and buyers think they can get a cheaper house half-a-year later or one year later, and so are waiting,” said Centaline Property Agency salesperson Thomas Fok, who hasn’t sold a single unit at the city’s upscale Mid-levels West district this year.

In addition, home prices fell 10 percent from their September peak due to worries over China’s slowing economy and the plan by Hong Kong authorities to raise the supply of residential units in the next five years. Local officials also reiterated that the existing property cooling measures will remain in place.

As such, BOCOM International Holdings’ analyst Alfred Lau believes that home prices in the city could fall by 30 percent in 2016.

Given this challenging environment, Sun Hung Kai Properties slashed its sales target in Hong Kong by 18 percent to HK$27 billion for the whole of 2016. Sales by New World Development also plunged 79 percent during the first half of its financial year to HK$2.8 billion, which is just 28 percent of its full-year target.

Despite the challenging situation, some developers still see opportunities in Hong Kong. For instance, Goldin Financial Holdings’ Chairman Pan Sutong feels that prices of luxury homes will remain resilient, especially for those located in areas with limited supply.

Earlier this month, his company submitted the winning bid of HK$6.38 billion for a land parcel in the posh neighbourhood of Ho Man Tin, where a subway station is being built.

Recovering investment money can be arduous

Singaporeans who have invested in overseas properties but ran into problems are finding it tough to get their money back, as filing legal complaints against foreign developers is hard due to the unfamiliar rules abroad, revealed media reports.

Moreover, class action suits tend to drag on if all the claimants do not agree on decisions, said an attorney who is working with several clients to recover their monies from foreign developers, including EcoHouse.

Reportedly, the property firm promised a return of 20 percent for a 12-month contract with a minimum investment amount of £23,000 (S$46,467) per Brazilian housing unit. However, many investors have yet to receive their capital or the promised returns.

In another case, his clients invested around US$20,000 (S$40,398) in a US property fund, but the returns have yet to materialise.

Despite the arduous process of filing legal complaints against foreign entities, Singaporeans can turn to the Council for Estate Agencies (CEA) for cases involving local agents who have marketed foreign properties.

According to CEA, estate agents and salespeople must adhere to the Estate Agents Act when marketing overseas properties in Singapore. Those who flout the rules could receive a warning letter, pay a fine, or have their licence suspended depending on the severity of the crime.

On average, the agency receives 800 complaints each year. Specifically, there were nine complaints involving foreign property purchases from 2013 until now. These include delayed construction, winding-up of foreign developers and loss of entire deposits after cancelling the transaction. However, CEA did not reveal the outcome of the complaints.

Based on data from the Monetary Authority of Singapore (MAS), the estimated losses stemming from such cases are not small, considering that foreign property transactions surged from S$1.9 billion in 2012 to S$3 billion the following year, before easing to S$1.1 billion in the first half of 2014.

Furthermore, about 600 to 1,000 overseas property units are transacted here each year, compared to around 6,000 units sold in the local housing market, noted Chestertons managing director Donald Han.