Older buildings in prime areas offer value, says investor

Veteran property investor Mico Chung Cho-yee believes the best property buys in the Hong Kong market are now to be found among old residential buildings on offer in luxury districts and retail space in prime locations such as Tsim Sha Tsui and Central.

By contrast the mass residential market had settled into a consolidation stage in March after prices had jumped more than 10 per cent in the first two months, property agents said.

But Mr Chung, the chairman of property investor Capital Strategic Investment (CSI), said the wide price gap between old and new projects in luxury locations presented value to the careful investor. He cited as an example Trafalgar Court in Tai Hang, where the average price of the 23-year-old luxury housing estate was about HK$11,000 per square foot - only half the price fetched at the Legend, a one-year-old project in the same area.

Mr Chung said he was confident that many potential buyers would be interested in buying flats in the old projects once they were renovated, as supply of new luxury flats would remain limited in the next few years.

'The efficiency rates of old buildings are higher than new buildings. They are located in traditional luxury areas but prices are much lower than the new projects. Investors can generate profit by renovating and reselling the units,' he said.

But retail outlets have lost their appeal to investors as growth in rental yields has slowed.