Hong Kong should build an investment index for commercial properties, similar to those in most other major economies, to provide a benchmark against which to measure the returns on portfolios, according to Nicholas Brooke, chairman of Investment Property Databank Asian advisory board. An index also sent a signal to the world about the way a market conducted itself, he added.
'Without an index, it is impossible for anyone to say exactly how well the property market has performed at different times; when the peaks and troughs of the cycle occurred; how volatile [or risky] the market is; how property investments compare with stocks and bonds; and how Hong Kong property compares with other markets,' Brooke, who is also chairman of real estate consultancy, Professional Property Services, said.
He agreed that some aspects of Hong Kong's property market were transparent, and a lot of useful information about purchases and lettings was available from the Land Registry.
'But transparency is not just about the availability of information. It is also about presenting information in a way that allows meaningful comparison, and that is what a robust index, constructed to an internationally recognised standard, would allow,' he said.
One measure of returns available in the market was provided by international property performance measurement company, Investment Property Databank (IPD), which collected information on real estate investment assets held in property companies, Reits and private-equity funds across Asia.
Last week, the IPD released a summary of its findings, which showed that based on property investments valued at nearly HK$ 1.9 trillion, the average return for the nine key markets in the study was 8.4 per cent last year, and 6.2 per cent a year over the past five years.
'This immediately tells a compelling story of Asia's strength relative to other parts of the world, as IPD's equivalent five-year figure for direct property in the US was just 2.3 per cent per annum and the annual average for Europe was 3.5 per cent.'