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Forbes: Why Third Avenue Is Buying Up Hong Kong Real Estate

Kenster1_GlobalValue
edited July 2012 in Fund Discussions
TAREX: +20% YTD

http://www.forbes.com/sites/abrambrown/2012/07/19/why-third-avenue-is-buying-up-hong-kong-real-estate/

Despite headlines of an expanding bubble, Jason Wolf and Mike Winer, the men running Third Avenue Real Estate Value fund (TAREX, $24.07), are as bullish as ever over the former British colony. When they first visited the city in early 2005 Hong Kong real estate companies were trading at deep discounts, with low vacancy rates and below-normal debt-to-asset ratios, near 20%. Real estate prices are higher today, but the managers are still interested.

One tactic Wolf used in 2005 to ­survey the dense city’s property prospects was a helicopter tour, ­complete with live commentary from a local investment bank analyst.

Comments

  • scott
    edited July 2012
    I own HK Land via Jardine Matheson and have other holdings via Hutchison Whampoa, which has - I believe - been a 3rd Ave holding for a while (edited to add, just read the article and it mentions Whampoa and its parent company Cheung Kong w/pic). I also owned the Link, but sold that too early. The Link (which is available on the pink sheets in the US) is an interesting HK company in that it owns both malls and parking garages, as well as markets.

    I think my view on Hong Kong real estate is that, obviously you have limited space and supply, but it's gotten to the point where I think you're seeing smaller/local merchants forced/priced out and at some point, rents are reach the point where even luxury retailers are going to reconsider. I don't know when that is, and no one does - however, I think it's certainly closer to a top than a mid-point or bottom. The companies are technically cheap (often trading under book and/or at single-digit P/E's) and could go for a while longer, but I do think it's a matter of timing as values/rents get to a point that's crazy.

    I do think companies that own parking garages - given the limited space - are kinda interesting from a long-term perspective, though.

  • InvestorInvestor
    edited July 2012
    Two Hong Kong Billionaire Developer Brothers Formally Charged With Bribing Former City Official

    Besides the bribery charges, I see this interesting snippet:

    "Land is the primary commodity in Hong Kong. The government owns all of it. To build on it, developers require direct government approval and are supposed to receive close government scrutiny in the development process."
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