Newsletter No. 1 looks at political changes that could improve the prospects for property investors in Argentina; the continued boom in Vancouver real estate; how the Hong Kong government may finally be tackling the Heung Yee Kuk; defective buildings in Japan; an innovative use for Airbnb; and a fireplace ban in San Francisco
In 2012, I spent several days in Buenos Aires, a city full of beautiful old buildings, broad boulevards and lush parks. Those attractions, however, were diminished by economic policies that were decidedly unfriendly towards investors. The November election of President Mauricio Macri may make Argentina more attractive, particularly if his economic reforms gain public support.
Property prices in Vancouver continue to soar, with a home listed at C$1.9 million (US$1.4 million) recently changing hands for C$2.9 million. As in San Francisco, London and other “global” cities, Vancouver’s middle class is rapidly being priced out of the property market. This is prompting calls for legislation to correct the problem. In the meantime, Canada has one of the world’s most overpriced housing markets and a dollar that is falling along with the price of oil. Canada is also facing the prospect of higher interest rates. This is a market to watch, especially if you are a bargain hunter.
In October 2015, China announced the end of the one-child policy, prompting some analysts to conclude that this would stimulate housing demand. I disagree. The cost of raising a child, expensive housing, and the end of the traditional Chinese family (where multiple generations live under one roof childcare) are more influential than the one-child policy.
In November, authorities in Australia blocked the sale to “foreign entities” of a farming business that included over 100,000 square kilometers of land. Two Mainland companies—Genius Link Group and Shanghai Pengxin—were reported to be in a bidding war for the business. As Chinese individuals and businesses become wealthier and more internationally oriented, governments will need to find ways to address local concerns without alienating foreign investors.
To escape Hong Kong’s high rents and purchase prices, many people look to the New Territories, including outlying islands such as Lamma and Lantau. But along with lower prices comes dramatically slower Internet connections.
The illegal sale of indigenous villagers’ building rights in the New Territories is one of Hong Kong’s worst-kept secrets. At the end of November the Hong Kong government successfully prosecuted a developer and 11 villagers, who were each paid HK$130,000–$250,000 (US$16,800–$32,200) for their building rights.
Leading Japanese construction companies have admitted to falsifying engineering data in a growing scandal that echoes the Aneha case a decade ago. Several hundred buildings are believed to be affected by the fake data, and another 8,000 are under investigation. The scandal, which began in Yokohama condominium, has spread to Fukui, where it now includes a school gymnasium.
Okinawa is a popular retirement destination for people who are attracted to its warm climate and reputation for longevity. Okinawa is also the scene of a heated battle between the national and local governments over the relocation of the United States Marine Corps Air Station Futenma in Ginowan with a new base in Henoko, in Nago. People interested in buying in Okinawa may want to research soil pollution in the prefecture, an issue that has been covered by the Asia-Pacific Journal.
Trends and ideas
It’s a good idea to live in a neighborhood—or better yet a building—before you commit to buying a home. A New York City couple used Airbnb to take this idea to new heights, sampling a range of neighborhoods over the course of a year.
In October, San Francisco’s Bay Area Air Quality Management District introduced a ban on the construction of fireplaces in new homes. The ban was part of a package of regulations designed to improve local air quality. It will be interesting to see if other jurisdictions introduce similar legislation, or bans on barbecues (PDF).
For the first time, a retail bank is introducing negative interest rates for depositors. Effective January 1, Switzerland’s Alternative Bank Schweiz will charge 0.125% for money in current accounts and 0.75% on deposits above 100,000 Swiss francs. If this idea spreads, it could further inflate property prices.
International home prices
In October, The Economist released its quarterly survey of international home prices
On December 3, 2015, at 6:30 PM, I will be moderating a panel discussion on the relative benefits of investing in Toronto, Canada, and Tokyo, Japan. The event is organized by the Canadian Chamber of Commerce in Hong Kong and is open to the public. For registration and information, click here.
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Landed Newsletter No. 1. was published on November 27, 2015.