• Sat
  • Dec 20, 2014
  • Updated: 2:09am
Lai See
PUBLISHED : Saturday, 29 September, 2012, 12:00am
UPDATED : Saturday, 29 September, 2012, 2:31am

Dong Tao says Hong Kong's property market has gone crazy


Howard Winn has been with the South China Morning Post for two and half years after previous stints as business editor and deputy editor of The Standard, and business editor of Asia Times. His writing has also been published in the Far Eastern Economic Review, the Wall Street Journal, and the International Herald Tribune. He writes the Lai See column which focuses on the lighter side of business.

Hong Kong's property market has reached the tipping point, according to Credit Suisse's Tao Dong.

The chief regional economist for Asia ex-Japan explains that he recently completed the sale of a Hong Kong property. What triggered his decision to sell was a visit to Cyberport to watch a movie. This treat was followed by a meal at a Taiwanese restaurant he frequents. So, it was with some disappointment and surprise that he learnt it was closing down, since it appeared to be doing a good business.

The reason was a whopping increase in rent that is now becoming all too familiar all over Hong Kong. In this case, the proposed increase was from HK$60,000 to HK$220,000.

"I think the Hong Kong property market has entered a crazy phase," Tao said. He took this as a warning sign and decided to sell. "The real Hong Kong is disappearing, the beef noodles, the pineapple buns, because of this property craziness."


Testing positive for plagiarism

The blog Beijing Cream carried an intriguing headline on its site recently: "Global Times Olympics journalist tests positive for plagiarism." It then went on to relate the sad tale of a senior journalist at the Global Times, which is owned by the People's Daily, who was sent to cover the London Olympics. It transpires that much of what she wrote was plagiarised or made up and included interviews with people with dubious sounding names.

There was one interview, for example, with an Indian undergraduate called Jaime Gornsztejn. Her downfall was triggered by what she claimed was an exclusive interview with London mayor Boris Johnson. There were doubts at the newspaper over some of his remarks and how her English veered from native quality to something less so. Some of the quotes were checked on Google and up popped an article Johnson had written for the Daily Telegraph. She no longer works with Global Times.


Hyperbole rolls on

A Rolls is a Rolls is a Rolls, to paraphrase Gertrude Stein. That is to say, although the car has changed since first produced in 1904 it remains an icon, as they like to say at Rolls, for distinctive ultra luxury cars.

When introducing the new Phantom Series II to the press yesterday, Paul Harris, the regional director, Asia-Pacific for Rolls-Royce, was nothing less than exuberant. The Phantom had "sparked a Rolls-Royce renaissance", we were told. It had "reclaimed the pinnacles of automotive luxury refinement". And opening the rhetorical throttle, he added: "It goes beyond its primary role as a car and becomes to many a work of art, a fine piece of jewellery or a rare collectible object of desire".

It almost seems a shame to drive such an objet d'art. One of its many refinements include doors "which house Teflon-coated umbrellas to provide the grandest form of disembarkation from any motor car, whatever the weather". All this - car, jewellery, work of art, collectible - however you regard it, can be had for HK$9.9 million.


Airport saga continues

Readers may be familiar with the continuing struggle between green non-governmental groups and the Airport Authority over conducting a social return on investment (SROI) study on the proposed third runway.

The authority steadfastly resisted the move, even after it was urged to conduct one by the Legislative Council's environmental panel. The green groups were therefore stunned when the authority on September 19 issued a press release headlined "Airport Authority goes extra mile to appraise impact of planned three-runway system".

The green groups felt this was disingenuous since the authority has not agreed as such to conduct an SROI. It issued its own response recently, arguing that the authority "still has many more miles to go to establish itself as a socially responsible airport". It reiterates its key claim that the authority has "remained reluctant to commit to the environmental group's key demands for a social and environmental cost assessment". It also warns that unless it does agree it will not participate in technical briefing groups organised as part of the environmental impact assessment process.

All this is proving very awkward for the authority since recently announcing its objective of becoming the greenest airport in the world.


Have you got any stories that Lai See should know about? E-mail them to howard.winn@scmp.com


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This article is now closed to comments

An economic crash is healthy as it wipes out the loosers and reboot. Those who print money to keep loosers/zombies are only passing good money to bad money making things much worse eventually.
Property market in China is due for a crash, so is Taiwan and HK, the US dow at nearly its all time high its ridiculous considering that nearly 20% of its able to work population is not working. There is nothing healthy about the global economy, buy gold, silver and seeds and stock canned foods, economic armagedon will soon come
On the HKIA's proposed third runway: build it (along with a third HK terminal) at Shenzhen's airport. Plenty of room and can relieve some of the pollution we are experiencing from the hundred's of flights each day at CLK. There is a plan to link the 2 airports with a rail line in any case and this project can be moved forward with the third runway at SZ.
The sad thing about the property bubble in HK is that it is caused by (entirely preventable) loose money, and is repeating the mistakes of those countries now in serious trouble. Focusing narrowly on price and wage inflation, and failing to see asset bubbles as a serious issue, kept interest rates too low in the West. Now that the reversal is forcing these countries to print money to avoid deflation, HK is getting the cure without having developed a hangover yet. The whole fur of the dog, whilst you're still in the bar.
Stop accusing the west Hk people. Mortgage rate in Hk is lower than USA as bank in Hk is lending easier than anywhere else. In 1997 when our bubble bursted the interest rate was much higher but people still speculated. So it is. It just interest rate but was being used as an excuse. The issue is Hk people has only one belief in their life: property. Look at china, stock market is multi year low and only 40% of 2008 peak vs in USA the stock market is at 2008 peak level. So why china stock mkt so low and yet property price so high? Does not make economical sense but just a strong belief of price going up forever like Hk. When the bubble busted they will know by then.
Give you an example, I have friends living in tin Sui Wai believe their flat will worth 10,000 per sq ft soon. Crazy! Because they never use economic sense to calculate the rent and affordability. Many analyst in Hk including Toa dong already saying Hk property is crazy and the rise is not supported by fundamentals.
My point was, US monetary policy *is* HK monetary policy, because of a fixed exchange rate. But the US is in the hangover stage of their property bubble, HK is still inflating theirs.
Too further illustrate....in Silicon Valley california just last few months there is over $3b usd venture fund invested in startup alone. Junior engineer fetch 100k usd a year. Mark Z with $7 to 8 b usd wealth only recently brought a house for merely 7mu usd that we can't buy a 2,000 sq ft apartment in mid level. But he is mark Z.
Salary in Silicon Valley is much higher than in Hk and jobs are many as apple google oracle alike are there but land is also limited as the city is well developed. They also have easy money but mainly goes to startups for innovation. That's the difference!
You can't compare Silicon Valley alone to Hong Kong. You need to balance this place with the vast areas of the US where people have lost huge amounts on property, and you have whole neighbourhoods of empty houses due to foreclosure. The US was also bitten by the property bug. And they are now trying to fix it. But HK can't fix their problem, now or ever, because they do not control their own monetary policy. The US does.
Yes or no. This excuse is mostly used by bankers and real real estates agents. US did have a bubble in 2008 but if look at even at that time their top wealthiest tycoon like Bill Gates, Buffet, Ellison, etc top 400 billionaires are having little are from developers. Also most of their household wealth are not tied a high percentage to house value. If you look at Dow and S&P 500 not many developers there. But in HK please name the top wealthiest tycoon and companies that are not involved in properties? Even MTR without properties sales they will be in red!


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