Siu Kei Wong

The significance and performance of infrastructure in China

Purpose - The significant economic growth and urbanisation of China in recent years has seen increased importance given to infrastructure development in China; this includes airports, toll roads, communications, ports, power plants and water. The purpose of this paper is to assess the significance and investment performance of infrastructure in China, the linkages to commercial property markets and the increasing future role of international private infrastructure investors in China. Design/methodology/approach - This paper analyses the performance of infrastructure in China over 1995-2006. Using the Hong Kong-listed China infrastructure companies, risk-adjusted performance analysis is used to assess the added value of China infrastructure, with the portfolio diversification benefits of China infrastructure also assessed. Findings - The paper finds that China infrastructure has delivered significant and improved risk-adjusted returns, but there is evidence of some recent loss of diversification benefits by China infrastructure in a portfolio. The strong linkage between effective infrastructure and effective commercial property markets is particularly important, as international investors seek to increase their exposure to Chinas infrastructure and commercial property markets to add value in their international investment portfolios. Originality/value - This is the first paper to rigorously assess the significance and performance of infrastructure in China. This risk-adjusted analysis has enabled more informed and practical investment decision making by international investors regarding the significance and role of China infrastructure and the associated strong linkage to the commercial property markets in China. This will take on increased importance as international investors increase the significance of both China infrastructure and China commercial property in their portfolios.

Property price gradients: the vertical dimension

This is an empirical study on the pricing of two vertical property attributes: floor level and building height. Floor level is the vertical location of a unit in a multi-storey building; the extra price paid for a higher floor level is labelled a floor-level premium. Previous hedonic price studies unequivocally showed that the floor-level premium is positive, but they were silent on whether its magnitude varies with floor levels and with buildings of different heights. Indeed, building height is a feature of a building, not its constituent units, so it is not clear whether building height alone should affect the units’ prices. Based on a sample of highly homogeneous housing units in buildings of varying heights, we found that (1) the floor-level premium was not constant, but diminished as floor level increases; (2) there was no significant difference in the pattern of the floor-level premium between high-rise and low-rise buildings; and (3) there was a positive and significant premium for units in low-rise buildings over those in high-rise ones. These findings can help developers determine the optimal height and shape of their development.

The level of direct property in Hong Kong property company performance

Hong Kong is one of the most dynamic property markets in the world, and now provides the economic gateway to China. Using style analysis, the level of direct property in Hong Kong property company performance is shown to be approximately 15 per cent over 1984‐2000, with the level of direct property increasing to approximately 25 per cent in recent years. The level of direct property in Hong Kong property company performance is significantly below that seen for the USA, Europe and Australia. This highlights a number of key strategic property investment issues over 1984‐2000, relating to the level of direct property in Hong Kong property company performance. Also assesses the level of direct property at the individual property company level, as well as the property company sector level, further emphasising the strategic role of Hong Kong property companies in an investment portfolio. This research complements the previous research by Brown and Chau on excess returns in the Hong Kong property market, as well as highlighting the issues and role of both direct and indirect property for inclusion in diversified investment portfolios; these being key areas of Gerald Browns extensive property research agenda.

The significance of Chinese commercial property in an Asian property portfolio

Purpose – International investors have shown considerable recent interest regarding property investment in China via both direct and indirect property. The purpose of this paper is to assess the significance and performance of the China commercial property market compared to six developed and emerging commercial property markets in Asia.Design/methodology/approach – This paper analyses the performance of commercial property in China over 1998‐2007 for both direct and indirect property. Risk‐adjusted performance analysis is used to assess the added value of China commercial property in a pan‐Asia portfolio, with the portfolio diversification benefits of China commercial property also assessed. Sub‐period analyses are also used to assess the dynamics of China commercial property.Findings – This paper finds that China commercial property has shown significantly enhanced performance and diversification benefits in recent years. In a pan‐Asia property fund context, there are clear diversification benefits prov...

An empirical study on the positive externality of building refurbishment

Purpose – The papers objective is to empirically study the effects of building refurbishment on the prices of the dwelling units in a contiguous housing estate in Hong Kong.Design/methodology/approach – In a congested living environment like Hong Kong, it is difficult, if not impossible, to have a view unobstructed by buildings. As such, the quality of views is dependent on the aesthetic quality of surrounding buildings. It is likely that poorly maintained buildings will impose negative visual effects on their immediate surroundings. Refurbishing these poor buildings should, therefore, reduce or even counter this negative externality. To study the positive externality brought about by building refurbishment, a hedonic price analysis was conducted on a set of panel data consisting of property transactions in a large housing estate located in Pokfulam. This estate was chosen because its adjoining buildings underwent refurbishment in 1998.Findings – The results showed that the refurbishment increased signif...

Factors Influencing the Performance of Hong Kong Property Companies

Hong Kong property companies make a significant contribution to the Hong Kong stockmarket and general economy. A key issue is how much of Hong Kong property company performance is attributable to stockmarket performance and how much is attributable to direct property performance. Using a variance decomposition procedure, the proportion of Hong Kong property company volatility that is attributable to stock, bond and property factors over 1984-2004 is assessed. The dynamics of this Hong Kong property company performance is also assessed; particularly in relation to key economic and political factors.