Buying property in Asia? Real estate specialists give their investment tips

Hong Kong’s property market has plunged practically 20% since its peak, and it could be a superb time for householders to purchase — however buyers may need to assume twice, in accordance with Peter Churchouse, chairman and managing director of actual property funding agency Portwood Capital. 

With property costs within the metropolis down 15-20% since their peak, Churchouse mentioned now could also be a superb time to purchase a property in Hong Kong for those who’re trying to personal a house, however buyers looking for yield ought to take a look at Australia and New Zealand as a substitute.

Buyers and householders have totally different priorities, Churchouse identified.

For householders trying to purchase, “costs down this a lot might be not a foul time to look to be shopping for” for those who can afford to pay mortgage and down cost, he mentioned Tuesday on CNBC’s “Squawk Field Asia.”

“There’s nonetheless a little bit of draw back dangers … however maybe the worst is over.”

Dwelling costs in Hong Kong dropped for 4 months straight. The official housing worth index stood at 339.2 in August, down 7.9% from a 12 months earlier and 4.2% decrease from April peaks.

“Hong Kong might be the best place within the area to purchase, and I’d assume that Japan might be a detailed second,” he mentioned.

Shopping for elsewhere within the area is “fraught with all types of difficulties and authorized points … There are all types of banana skins,” Churchouse warned, explaining that residence patrons in different international locations both should be a resident, everlasting resident or an worker. 

“Usually, you possibly can’t personal property as an investor,” he added.

Jeff Yau, Hong Kong property analyst at DBS Hong Kong, mentioned costs in Hong Kong are anticipated to proceed plummeting and will fall by one other 10% in 2024.

In October, the Hong Kong authorities lower stamp duties for property patrons to assist enhance the town’s slumping actual property market. 

Among the many relaxed levies, the stamp obligation that non-permanent residents should pay for property and one other levy imposed on further properties purchases by residents will every be halved to 7.5%. 

Regardless of the optimistic information for homebuyers, demand might not bounce again in full pressure as the upper price of financing will stay a hurdle for potential householders, mentioned Henry Chin, Asia-Pacific’s head of analysis at CBRE.

For buyers searching for excessive rental yield, “Hong Kong isn’t the place,” Churchouse mentioned. “The yield at present is lower than the price of capital, lower than the rate of interest you are paying in your mortgage.”

Rental yield in Hong Kong is presently under 3%, whereas the efficient mortgage price exceeds 4.1%, implying a “adverse rental carry,” DBS Financial institution’s Yau mentioned.

“If the buyers have their first property, they nonetheless have to pay New Residential Stamp Obligation of seven.5% in the event that they purchase a second property,” Yau mentioned. “It’s not a superb time to purchase property for funding.”

The place can buyers discover good rental yield?

“The most effective yield in markets on this area, I are inclined to assume, are Australia and New Zealand,” Churchouse mentioned. Yield for residential property or business property there could also be as excessive as between 6-8% — “perhaps even increased,” he added.

In Japan as nicely, it is common to seek out rental yields of about 5% or 6%, he added.

In a rustic the place rates of interest are “very, very low,” he mentioned, “You may get a rental yield that increased than your curiosity prices in Japan.”

— CNBC’s Clement Tan contributed to this report.