Ka Hung Yu

The dynamics of Hong Kong's office rental market

Forecasting office rents is among the most researched topics in real estate study. However, there are still heated debates on how predictions can be best done. This study provides a generator approach, on the basis of both system dynamics and econometric modeling. The findings suggest that the office rental values in Hong Kong appear to be more volatile and uncertain under better economic conditions, likely due to both the supply side of the property market being over‐optimistic of economic trends and the development lags and adjustment cost, under the influence of the current land policies in Hong Kong, are the main issues behind this phenomenon. In order to minimize the uncertainties on the office leasing market, the government should relax the approval procedures concerning changing land use, and the subsequent rearrangements of premium payment. Further, the current policies on land sales need to be revised, especially the application list system. Those measures could reduce the time and transaction cost incurred, thus leading to more timely response to demand changes over time.

The impact of pricing strategies on time-on-market under various economic conditions

This study examines how price adjustments in a flats marketing phase, along with various housing attributes, influence its time-on-market (TOM). A Cox survival model is used for the analysis of two separate periods, one of economic downturns (2003) and one of economic recovery (2004--2006), in Hong Kong. Factors such as price adjustments, sale price, numerous housing attributes, general property price trend, and changes in unemployment rate have significant impacts on TOM, with their respective impacts changing over time. Specifically, the effectiveness of raising list prices before transactions, in optimizing sellers’ returns and TOM, depends on economic conditions as well as on the market expectations regarding future property prices. Directions on future studies are then discussed.

Office price index lagging in Singapore and Hong Kong

Price discovery of real estate investment has been getting lots of attentions from researchers and it is generally believed that lagging errors exist in appraisal‐based returns of commercial real estate investments, in comparison to other investment instruments traded in the stock market. Due to fewer transactions in the commercial real estate market, it is reasonable to notice a difference in the handling of current market information. By introducing two study approaches along with a test case using Singapores data, this paper explores the extent of lagging in Hong Kongs commercial (office) real estate values, in a State Space Model with Kaiman filter. The findings first suggest that whether appraisal‐based indices overstate or understate true values lies in the economy condition at the time. Then, commercial real estate values in Hong Kong are about three months behind the stock market property indices. Also, as indicated by the findings, data collection/selection bias may render a de‐lagged index not as efficient as it is supposed to be. This paper provides a different perspective on price discovery and the process of de‐lagging property values.

DYNAMICS OF ASSISTED HOMEOWNERSHIP IN SINGAPORE

ABSTRACT: This study aims to first investigate if the market-force hypothesis and upgrading hypothesis still hold in explaining the demand for first-hand housing development board (HDB) flats in Singapore. Then, simulations are carried out via system dynamics models to assess how policy changes, differentiated in scales and frequencies, affect such demand. The findings, while refuting the market-force hypothesis, extend the upgrading hypothesis, as capital appreciations through selling in the resale HDB market not only contribute to the upgrading of properties among HDB owners, but also provide incentives for nonhomeowners to make the first move in realizing the “Singapore Dream.” Further, simulations point out that either too few or too many institutional changes in response to market adjustments render the HDB system unhealthy. The former induces fluctuating demand, while the latter likely generates extra administrative cost that could cause long-term effects on the financial position of the HDB.

De‐lagging Hong Kong's office price indices via State Space Model with Kalman filter

Purpose – This paper aims to find out whether lagging problems exist within Hong Kongs office values.Design/methodology/approach – A State Space Model with the Kalman filter is deployed in detecting the extent of lagging errors in Hong Kongs office price indices, proffered by the ratings and valuation department (RVD).Findings – The findings suggest that about one year of lagging errors exists in RVDs office price indices compared with the stock market property indices. Also, the finding suggests that the Kalman filter provides a more efficient form of estimates for real estate values and returns.Originality/value – While most studies investigating lagging problems of appraisal‐based returns concentrate on the US real estate market, studies in this regard for Asian countries (or cities) are few and far between. Hong Kong, in particular, is worth studying, considering its established role as a financial centre in South East Asia. This paper also provides some insights for further studies on the predicti...

Perspective on Cross‐border Residence of Hong Kong Citizens in the Chinese Mainland

This paper explores the phenomenon of Hong Kong citizens residing in mainland China. This situation is interesting as it involves two distinct institutional structures, rather than the one involved in conventional residential mobility. In addition, this is a different scenario, in which people move from a developed area to a comparatively developing area. This paper aims to determine how different attributes weigh in potential decisions about cross‐border residence and the characteristics of these residents, from the ex ante perspective. A logistic regression model is used to gauge the effect of various factors on the stated preferences of cross‐border residence. The findings suggest that the older generation has a higher preference for future cross‐border residence than other demographic groups. This is in sharp contrast with conventional theories on residential mobility. This finding has implications with regard to government policies in areas such as social security, healthcare and housing provision. In addition, institutional factors play a critical role in restraining the intentions of several population groups. For instance, local public rental housing limits the desire for cross‐border residence among its tenants, while the distinctive institutional arrangements between Hong Kong and mainland China, due to the “One country, two systems” policy, keep the younger, more educated class from potentially relocating to Mainland China.