Socialites on a buying spree

Hong Kong socialites used to appearing in the entertainment notes of the Chinese press have lately been turning up instead on the front pages of property news.

The property sections of the main Chinese-language newspapers have read like a who's who of high society in recent weeks as the well-heeled have gone on buying sprees, spending millions on new flats and houses on Hong Kong Island.


Credit:  SCMP graphics

Heading the buying frenzy has been former actress Chiang Lai-ping, the daughter of wealthy Chiang Chen, chairman of Hong Kong-listed Chen Hsong (Holdings), which makes plastic injection mouldings.

Ms Chiang has reportedly spent more than $12 million on five two-bedroom apartments in Sun Hung Kai Properties' Sham Wan Towers, a new development in Ap Lei Chau.

Sham Wan Towers has also attracted beautician Cheng Ming-ming and socialite Szema Yin. Ms Cheng paid $13.5 million for five units, while Ms Szema paid about $12 million for four flats.

Ms Cheng earlier bought units in the luxury residential projects Residence Bel-Air in Pokfulam, Parc Palais in King's Park Rise and Regalia Bay in Stanley.

Cantopop singer Miriam Yeung obviously had investment as well as a home on her mind when she paid more than $30 million for a new detached house of 4,000 square feet in Regalia Bay, Stanley.

Property agents say these purchases indicate investors are back in the market - a factor necessary to push up propertyy prices.

But is history repeating itself?

Seven years ago, socialites and celebrities caught up in the excitement of the property boom spent a fortune buying luxury units.

SK Pang Surveyors managing director Pang Shiu-kee said a lot of celebrities turned into property speculators in the 1990s.

"Looking back, how many of them made profits? Some went broke when the property bubble burst in 1998," he said.

Among them was Cantopop singer and actor Kenny Bee, also known as Chung Chun-to, who declared himself bankrupt in 2002 after failing to repay huge debts arising from losses from real-estate investments made with his socialite ex-wife Teresa Cheung Siu-wai during their marriage.

The couple, who divorced in 1999, reportedly took out loans totaling $154.4 million at the height of the property boom in 1997.

They are believed to have invested in five luxury apartments - in Shouson Hill Road, Redhill Peninsula, Plantation Road, Repulse Bay Road and Convention Plaza.

While realtors said a new group of socialite investors was emerging to replace those burnt in the 1998 crash, Mr Pang sounded a note of caution. Signs that celebrities were active in the property market did not mean a strong recovery was under way, he said.

"Celebrities usually play a modelling role for the public. Property agents intentionally leak news of celebrities investing in properties in the hope of luring the general public into buying," he said.

"But celebrities are not experts in real estate, so would-be buyers should not be influenced."

Would-be buyers should consider the key factors of affordability, job security, interest rate trends and the city's economic outlook before deciding to buy property, according to Mr Pang.

Property speculation was a dangerous game to play, especially if prices rocketed, he warned.

"Speculators want to buy and sell for a quick profit. It's a bit like musical chairs . . . someone gets their figures burnt when the music stops.

"When a mass housing project in Tsuen Wan is selling for as high as $3,000 per square foot to $4,000 per square foot, how much profit can the buyer make when he sells in the secondary market?" he asked.

Cheung Kong (Holdings) has sold 90 per cent of its jointly owned low-density Tsuen Wan development The Cairnhill for an average price of about $3,500 per square foot. The development comprises 770 units ranging in size from 1,199 sq ft to 1,883 sq ft.

The company said 35 per cent of the buyers at The Cairnhill were investors.

Mass housing prices have reportedly risen 20 per cent since last August, while luxury home prices are estimated to have jumped 30 per cent or more.

The rises have been spurred by the inflow of hot money, historically low interest rates and the government's policy of regulating the supply of flats, according to the Bank of China (Hong Kong)'s latest research report.

If Hong Kong's economy grew by about 5 per cent, as economists expect, flat purchases could exceed the 20,000-unit average of the past five years, ending the oversupply of flats before 2007, the bank said.

Bank of China (Hong Kong) economist Michael Dai Dao-hua said buyers should be cautious of prices rising too fast.

"Current economic fundamentals are not supportive yet of a large surge in property prices as [Hong Kong's] economic transformation is a long-term endeavour," he said.

People should be wary of an overheated property market. There was a danger of the economy not being able to support a property price surge driven by speculators' expectations of dwindling flat supply, he said.

"If prices surge too fast within a short time frame, such as 12 to 18 months, the market will become volatile and it may not be in the best interest of the healthy development of the general market."

Mr Dai said the market had not reached alarm levels yet, even though speculators had been active in the luxury housing sector. "The residential market, as a whole, has so far performed steadily," he said.

He estimated 20 per cent of residential property buyers over the past six months were investors, compared with 50 per cent in 1997.

"While everybody is finding solace in the reviving property market, there is still a need for caution," he said.   - By Peggy Sito    South China Morning Post   4 Feb 2004



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