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SCMP Reporter

But some investors are picking up bargains and getting solid returns renting to tenants unfazed by their homes' past

Murders and suicides happen almost every day and many happen in homes.

This has a negative effect on the value of these properties, especially in Chinese society, in which fung shui  plays a big role in choosing a home.

While most home seekers avoid flats in which someone has been murdered, some bargain hunters focused on rental returns see them as investment opportunities.

One of Hong Kong's most infamous murders took place in flat 312 of Block D in Kornhill in 1988 when a woman killed her husband, cut up his body with an electric saw, boiled the parts and dumped them on a rubbish tip.

Since then, the unit has been traded twice,  according to property agents.

In the most recent transaction, in 1990, the apartment sold for $1.16 million. The market price for similar units in the same estate was more than $1.4 million at the time, according to Simon Yuen, a manager at Midland Realty.

'The two buyers fully recognised the history of the apartment and both of them leased out the apartment after they bought it,' said Mr Yuen.

He said the effect of murders and suicides on property prices was greater than the effect on rent, although landlords expected to wait longer to find the right tenants.

Some of these flats were 10 per cent cheaper than the market price and there were investors who considered them a good investment opportunity, Mr Yuen said.

'Some tenants, especially expatriates who want to lease a home for only one or two years, tend not to thoroughly research properties while some just don't care about the history if the price is right,' he said.

Brian Cheung Nam-chung, a senior manager  at Liu Chong Hing Bank, said the bank's surveying department generally valued flats where there had been a murder at  a 10 per cent discount to the market price. Flats where there had been a well-publicised murder  might be more than 30 per cent cheaper.

However, Mr Cheung said most buyers who knew the history of the properties bought them at discounted prices.

'In some rare cases, our valuations are higher than buyers' acquisition prices,' he said.

Chau Kwong-wing of Hong Kong University's department of real estate and construction found that flats in the Kornhill block where the woman murdered her husband in 1988 had been trading at an average of 6.6 per cent less than units in other Kornhill blocks. His study took into account variables that affect price such as floor size, age and market fluctuations.

Prices in other buildings that were the scene of a murder were also lower.

Prices of flats in Block 17 of the Tsuen Wan Centre fell by 5 per cent after a  mother, her three children and two relatives died from poisoning in a family murder-suicide pact in flat 5G.

'The price-reducing effect on the whole block shows the high transparency and efficiency of the property market in Hong Kong. There's almost no way to hide such obvious negative factors to property valuation,' Professor Chau said.

Flats in which there have been less well-known murders and suicides are more commonly seen on the market.

Eddie Cheng,  founder of Hong Kong's first website database for flats where there have been unnatural deaths, said more than 10 flats where there had been murders were put on the market each month.

According to hk-compass.com, Kwun Tong tops the list with 165 flats that were the scene of murders offered for sale since the listing started four years ago. Hong Kong East and Sham Shui Po followed, with 143 and 132 flats respectively.

Mr Cheng, who is also a real estate agent, said members of his website included real estate agents and surveyors, who used the data to advise their clients.

'Real estate agents should be knowledgeable about the history of the units and advise their clients on the matter,' he said.

However, real estate agents are not obligated voluntarily to disclose a property's unpleasant history.



Murders come back to haunt apartment prices