The NYLONKONG Phenomenon: Property Investing in New York, London and Hong Kong
Talking to Luke Ng, CEO of Century 21, Lucy Davis discovers that buying property in the world’s top three financial capitals remains a good investment
New York, London and Hong Kong: the three cities that drive the global economy represent excellent real estate investment opportunities. Powered not only by their stock exchanges, these three cities are also three of the biggest tourist destinations in the world - all are consistently ranked in the world’s top ten - so they court plenty of transactions from visitor dollars too.
In view of the recent economic downturn, however, things have slowed somewhat, even for these three prosperous municipalities, which represent three of the richest cities in the world. "It's a sensitive time for the market due to the global financial situation. In Hong Kong, things began to slow down in May, and the number of transactions has dropped,” confirms Luke Ng, CEO of Century 21.
However, Ng points out that it’s not all doom and gloom on the Hong Kong property front, and he cites one new development, Les Bleu Deux in Tung Chung, that has generated a lot of interest of late. By the middle of last month, 424 (86 percent) of the property’s 524 units had already been snapped up. “It’s close to the airport, and the price is good, at around HK$5,000 per square foot,” says Ng.
Besides well-located new builds, Ng confirms that the luxury sector is another area that remains relatively stable locally. “The rich are still very rich, and the price for high-end properties currently stands at around HK$20,000 per square foot on a high floor, and around HK$16,000 for low floor properties.” The 4,000-square-foot triplexes at The Cullinan in Kowloon are a case in point. “The price remains stable, as there is limited supply for such properties,” Ng notes.
Averaging at HK$48,000 per square foot according to the latest research from Knight Frank, London is the most expensive place to purchase property in the world after Monaco. The price per square foot for a flat in prime Central London is even higher, and currently stands at between HK$50,920 and HK$84,555 - considerably more than New York’s Upper Manhattan (HK$31,005 to HK$53,546) and much more than Hong Kong’s prime districts (HK$24,502 to HK$34,521).
Despite the high price, Ng says that he’d rather buy a home in London than in Hong Kong or New York. “There’s still a lot of buying interest from overseas investors, and real estate now stands at a more reasonable price due to the drop in the pound’s value against other currencies.” There is currently HK$12.3 dollars to the pound, for example, whereas last year, it was over HK$15 to the pound, so if you have some spare cash, London looks like a hot investment.
Indeed, it’s a buyer’s market now in London, and house prices have dropped substantially of late, losing £130 (HK$1,634) of their value every day since the start of the year. “At the very high-end of the market (such as the West End, the South Bank, and the Docklands area) there is still a considerable amount of interest particularly from Middle Eastern, Indian and Russian investors,” says Ng. He also points out that Greater London will become attractive to investors once the Channel tunnel link, High Speed 1, starts commuter services next December. “North London also remains popular, as it’s close to the M1,” he adds.
Like London, New York is still very popular with investors, and the low interest rate in the US has presented some good opportunities, although at the top end of the market, prices continue to spiral. “The median sale price for high-end real estate in New York increased to an average price of US$4.8 million in the second quarter of 2008, up 35 percent on last year,” says Ng, who reveals that this is partly due to a lack of new supply.
Asked which New York district has seen most activity recently, Ng says that the east side of Manhattan (notably the Chrysler building) has seen good returns, as have the residential areas around Central Park - but the cost remains high. “Prices for apartments are around US$2.2 million in 2008, but they were US$1.36 million in 2007, so that’s an increase of 61 percent.” Ng also observes that the average price per square foot for a new development has increased: it currently stands at around US$ 1,469, which represents an increase of 23 percent on 2007.
Nevertheless, New York property is a good investment if you can afford it. “There really is no city in America to rival New York, and even the markets in California and Florida are not stable, apart from high-end properties,” Ng says.
Asked if there are any other global cities to match these three, Ng says, “Many people are talking about Brasilia, as Brazil is now the sixth largest economy in the world, and property prices continue to rise there.” If you’re looking for long-term stability, Ng recommends Shanghai, where you can still buy at a reasonable price. “There is plenty of appreciation potential over the next few years too,” he adds.
Returning to the NYLONKONG theme, Ng notes that as all three cities are key financial centres, there will always be solid returns to be made in the Central Business Districts. If you’ve got the cash, he advises that you buy an apartment as close to the main hub as you can, as such properties can always be rented to affluent professionals. In an uncertain market, London, New York and Hong Kong still look like a worthy investment.
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