Buying property, Hong Kong style

[Monoriu]

So, my parents-in-law just bought a flat from a developer.  Apparently they now sell flats this way -

1. Launch a huge advertising campaign, with TV ads, newspaper specials and front page ads, celebrity endorsements, everything.  The theme is that living in the property is like living as a European aristocrat of old.  However, the flats are not for sale at this point. 

2. A few weeks into the campaign, the developer will suddenly announce that the flats will be on sale starting at 10:00 pm on the same day.  The actual accnouncement was made only a few hours before the sale.

3. Thousands of real estate agents would spread out across the streets and call people up to gather as many interested people as they can in the few hours they had.  All the sheep were then shipped free of charge to the huge and luxuriously built show room that cost hundreds of millions.  These are designer built no-expense-spared live-sized models of the flats showing how they look from the inside.  Of course, the internal walls are removed, as many mirrors as possible are installed and every surface is covered in marble.

4. The tens of thousands of potential buyers and agents were then cramped into the showroom and made to wait for hours.  Free flow of smoked salmon and cocktails.  Doors were shut.

5. A few hours later, the developer would abruptly start to throw the flats at the waiting agents, literally.  One at a time.  The in-laws reported that developer staff would throw a document file containing the contract and sale price of a specfic flat at the hungry agents, who physically battled each other using anything and everything they could find - including fire extinguishers - to catch the flying files and to deny them to competing agents.  It was chaos.  The successful catcher would then go back to his buyers and try to convince them to buy it.  The buyers could not choose which flat to buy - they could only choose whether they buy the flat that their agent happened to catch for them or not.  If they decided not to buy, the file was then returned to the developer staff, who threw it out to the pack of hungry agents again.  Each buyer only had a few minutes to decide.  Otherwise, patrolling developer staff would snap the files back.

6. In the meantime, the developer kept making announcements via loadspeakers that the price of each flat would keep increasing - they vowed that each file would get more expensive to "ensure the value of buyer's investments.  Therefore, this was "good news".

7. News reports of the next day showed that all 1,000 flats were sold within 4 hours and 30 minutes when the first file started flying.  The sale went on until many hours after midnight. 

8.  The in-laws spent US$400k to buy a 500 square feet flat, in a pretty bad location. 

[Martim Silva]

In those situations, always say "no". But I bet you know that.

Your in-laws are idiots. They will lose money, unless the flat is in an area targeted by the goverment for development (which I doubt it is).

For me, land is always bought when I think it's a good idea to buy it (and negotiating directly with the owner). Real Estate agents are just thieves waiting to prey on the unsuspecting, and I should know, as I know several of them - who, incidentally, tend to be powergamers.

[garbon]

I guess this is one of the things that I envy, Sask.

[Monoriu]

In those situations, always say "no". But I bet you know that.

Your in-laws are idiots. They will lose money, unless the flat is in an area targeted by the goverment for development (which I doubt it is).

For me, land is always bought when I think it's a good idea to buy it (and negotiating directly with the owner). Real Estate agents are just thieves waiting to prey on the unsuspecting, and I should know, as I know several of them - who, incidentally, tend to be powergamers.

Well, every developer sells flats this way.  So either you buy from them, or you buy from individual small owners in the second hand market.  A lot of small buyers don't live in the flats they buy.  They buy from developers, then sell the flats for 10% more.  So, in the second hand market, you don't have to go through the bull shit, but you'll likely pay a higher price. 

I agree that real estate agents are scum.  But there is no way to avoid them.  Developers won't deal with small buyers.  If you contact the developers directly, they'll say they only deal with agents.  Believe me I tried.

[citizen k]

I agree that real estate agents are scum.  But there is no way to avoid them.  Developers won't deal with small buyers.  If you contact the developers directly, they'll say they only deal with agents.  Believe me I tried.

I think most home developers in U.S. will deal; with anybody who can buy.

[Monoriu]

I think most home developers in U.S. will deal; with anybody who can buy.

There are only 5 or 6 large developers in Hong Kong, all with annual revenues in the tens of billions.  For real estate agents, there are only two large chains.  The agents and the developers have lots of standing agreements that are mutually beneficial.  There is no reason why they want to change that.

[Zanza]

What kind of rent can you get for a 500 square feet appartment in a bad location in Hong Kong?

[Monoriu]

What kind of rent can you get for a 500 square feet appartment in a bad location in Hong Kong?

I happen to know, because my brother in law is renting such an apartment right now.  He pays about US$700 per month.  The landlord however is responsible for costs such as -

- management fees (trash collection, cleansing of public corridors, maintanence of lifts, security etc)
- property taxes
- profit tax on rental income
- repairs

[DisturbedPervert]

You'd think if you're spending 400k on a 500 square foot flat they'd at least let you choose which part of the hive you want to live in.

[MadImmortalMan]

- management fees (trash collection, cleansing of public corridors, maintanence of lift security etc)

Okay, normal.

- property taxes

Uh...Of course, the OWNER of the property pays that. 

- profit tax on rental income

Ditto, and duh.

- repairs

Naturally. Owner pays repairs.



But OMG look at all this stuff we pay for!!!!!1111

[Monoriu]

- management fees (trash collection, cleansing of public corridors, maintanence of lift security etc)

Okay, normal.

- property taxes

Uh...Of course, the OWNER of the property pays that. 

- profit tax on rental income

Ditto, and duh.

- repairs

Naturally. Owner pays repairs.



But OMG look at all this stuff we pay for!!!!!1111

Profit tax on rental income is often overlooked.  In Hong Kong, investors generally pay no tax on interest income, dividends of capital gain. 

[Monoriu]

The way developers sell property changes over time.  Back in the 80s and 90s, the preferred method was "first come first served".  People would queue up in the streets days before the flats were sold.  The one first in line could choose whichever flat or flat(s) that he desired, as long as he had the money to buy them.  This created huge spectacles where thousands would camp outside the developers' offices for days or even weeks before the actual sale began, battling the elements to have the privilege to spend their entire life savings on shoe boxes.

But very soon this method created lots of problems.  Street gangs were paid to occupy all the spots in the queue, and to eject everybody else.  Then different street gangs began to spend most of their time fighting over queue spots.  The police eventually stepped in, and asked the developers not to use "first come first served" anymore. 

[Brazen]

I presume you went along for the free food and drink Mono?

[Monoriu]

I presume you went along for the free food and drink Mono?

Absolutely not.  I have no wish to support the in-laws in their acquisition of this property.  Nor would I want my wife to do so.

[CountDeMoney]

Once again, Mono provides comedy gold on how the godless yellow heathens do things.