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The second generation of riches is highly possible to lose their families’ wealth
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The second generation of riches is highly possible to lose their families’ wealth
Damon Ho
2024年5月18日
Over the past few decades, real estate investment has always been a method of quick wealth creation in Hong Kong. If an investor had purchased a flat in his early age, he would easily re-mortgage his capital-gained properties to obtain extra capital to buy the other investment properties. This simple wealth creation model is beneficial to many families. In the past decades, a considerable number of wealthy families have been accumulating to the total amount of Hk $ 10 billion through this model.
By purchasing and holding, the landlords acquire extra capital by re-financing the capital gained properties and uphold their long-term positive outlook to the property market. Then, they repurchased again by the gained capital. Following this method and keeping it on, they could become 10 billion real estate tycoons sometime later. This get-rich-quick scheme is so straightforward that one real estate tycoon once said that his company never hired MBA graduates from prestigious universities.
From 2003 to 2021, the property market kept on ups and downs, but it rebounded from its lows finally. In recent years, a few real  estate tycoons retired and delivered the corporate right of control to the next generation. In fact, most of the second or third generations of the riches were in their early thirties and they had never been tested in their careers. As a new leader of their families, they were eager to show their courage and vision after their promotion. So, most of them preferred to invest a lot of money in iconic projects regardless of positive investment return in the hope of making a name for themselves in the short period of time.
Due to the Covid-19, Hong Kong had been partially locked down for three years during 2020 to 2022. As a result, the rents and selling prices of commercial & shops properties have been declining. Their huge projects suffered significant paper losses. It is estimated that half of these companies governed by these new tycoons will become bankrupt before the end of this year.
Hong Kong's wealthy families are experiencing an economic transformation that has never been seen before, and the previous model of wealth created by real estate has been changing. At a time when the way of generating wealth through the accumulation real estate investment is slowly fading away, what industries can replace it in the future will determine whether Hong Kong can successfully transform into a new prosperous city.
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The second generation of riches is highly possible to lose their families’ wealth
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1.
Hong Kong's office rents is declining |
| 2024-05-18 18:13 |
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Amidst a noticeable decline in rental prices, Hong Kong's office market is grappling with rising vacancies and intensified competition. In the first quarter of the year, the vacancy rate surpassed 16%, prompting forecasts of further drops in rental rates. Fiona Ngan, Head of Occupier Services at Colliers Hong Kong, attributed the downward pressure on rents primarily to these high vacancy levels and the fierce rivalry among new and existing developments. "I think mainly because of the market vacancy, and also the strong competition between the new developments and also the second-hand market," Ngan explained, indicating that these factors are contributing to the changing dynamics in Hong Kong's office market.
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2.
100% agree |
| 2024-05-19 02:50 |
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3.
China Gov announced plan to property marketsave |
| 2024-05-19 17:48 |
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Even though China’s economy expanded faster than expected at the start of this year, growth is being weighed down by the all-important real estate sector, which once accounted for as much as 30% of economic activity. He Lifeng, vice premier and the Communist Party’s top economic official, said Friday that municipal governments should buy unsold homes and convert them into affordable social housing, in a plan that has been trailed as a major solution for the country’s crisis-ridden property sector. In a coordinated move, the People’s China of China (PBOC) announced that it will set up a nationwide program to provide 300 billion yuan ($41.5 billion) in loans to fund state purchases of unsold homes.
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4.
Uk house prices fell |
| 2024-05-20 20:49 |
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Uk house prices fell at the sharpest pace in eight months after the cost of mortgages crept higher, one of the country's biggest lenders said, underscoring continued cost-of-living pressures on consumers ahead of a general election this year. The figures from the Nationwide Building Society followed a scaling back of bets on Bank of England interest rate cuts this year, and that is likely to push up the cost of home loans in markets. That's strained the ability of people to afford to buy a property and held back a recovery from last year's slump. "Though mortgage affordability is much better than it was last summer, it remains very stretched relative to historical norms," said Peter Arnold, chief economist at EY UK. "A strong recovery is unlikely."
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5.
The jobless rate stood at 3% |
| 2024-05-21 22:12 |
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The jobless rate for the February to April period stood at 3%, unchanged from the January to March record. Based on the data from the Census & Statistics Department (C&SD), the total number of unemployed people from February to April was 113,700, 5,700 less than the preceding period. From February to April, the underemployment rate was also unchanged at 1.1%. Meanwhile, total employment increased by 5,700 to 3,694,100, and the labour force grew by around 7,700, to 3,807,800.
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