Condo Investors are Moving to New Projects
In the past, condo investors looked at resale product and if the rents could cover the costs, then they bought it. In today's market, where multiple offers are very common, investors are not prepared to 'bid'.
Investors have then moved to buying new projects. In fact several of the new projects this year have been sold almost exclusively to investors. Compare that to just a couple of years ago when the split between investors and end user consumers was 50/50. Investors are banking that prices will continue to rise. Most projects take 3 years from pre-sale to final registration. If investors buy a property and put down 20% in deposits, and if condo prices rise by 25% over this period, then the return on their deposit will be over 100% if they sell at registration!!
I would be interested to know who is using this strategy? Now if prices don't go up, can the investor rent out the unit and get their costs covered like before?? That is the question that will determine how the market will perform three years from now. What do you think?
Investors have then moved to buying new projects. In fact several of the new projects this year have been sold almost exclusively to investors. Compare that to just a couple of years ago when the split between investors and end user consumers was 50/50. Investors are banking that prices will continue to rise. Most projects take 3 years from pre-sale to final registration. If investors buy a property and put down 20% in deposits, and if condo prices rise by 25% over this period, then the return on their deposit will be over 100% if they sell at registration!!
I would be interested to know who is using this strategy? Now if prices don't go up, can the investor rent out the unit and get their costs covered like before?? That is the question that will determine how the market will perform three years from now. What do you think?
posted by RemaxCondosPlus at
4:02 PM
2 Comments:
Other markets in Hong Kong is already like this for a long time. Basically real estate prices doesn't come down easily.
You are right. Real estate prices are 'sticky' coming down. In other markets where people have to sell, they just reduce the price until it is sold. In real estate, if people don't get their price, they just take their property off the market. All you need to do is look at the number of terminated and expired listings even in this market - almost 50%!!
That being said, where is our market heading? Next year and three years out?
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