Let’s get fiscal

The property market is totally insane in Hong Kong at the moment.

So, no change there.

But financial types, such as accountants, chief financial officers, and business journalists are somehow expected to make sense of it.

The present madness reminds me of an email I received from a reader named Kathy. “I’ve had five landlords in nine months,” the Hong Kong Island resident said.

They keep selling her apartment (with Kathy in situ) to other land-lords. She’s never quite sure who to pay the cash to. One day it’s one guy, the next, a complete stranger.

I replied: “Well, Kathy, I think you might as well just send the money to me. I’m not your landlord, but hopefully it’ll be my turn one day, and we might as well be ready.”

My friend Tony, a retired police officer, bought a Kowloon-side apartment which was just a drawing on a flip chart. “You’ll have the satisfaction of being the first owner of a brand new home,” I told him.

“Nope,” he said, explaining that the deeds had already changed hands many times. “I am the fifth owner.”

As a useful guide to the insanity, and to fill space, this column will do a question and answer on the current state of real estate in Hong Kong, starting with a question or two, based on reality and then just going with the flow.

Q: Dear Mr. Know-It-All- Financial-Columnist, why did two people pay multi-million dollar deposits on apartments near where I live and then walk away from the deals?

A: This means the property market is crashing.

Q: So how come, in the same week, several apartments around the corner just sold out at premium prices?

A: This means the property market is booming.

Q: How can the market be crashing and booming at the same time?

A: This is Hong Kong. You want logic, go to Germany.

Q: I demand a better answer.

A: Hong Kong prices are in the down part of the cycle, but hot money from China doesn’t care about this.

Q: So is that the hot gossip in the financial news business?

A: Yes. And the other item is this. Fourth Uncle (Hong Kong real estate billionaire Lee Shau-kee) has just retired. Thank God. I know too many people who followed his property investment “tips.” Here’s my tip: Never take gambling advice from a man who can LITERALLY lose HK$100 million without noticing.

Q: Why is the Hong Kong property market so irrational?

A: It’s all due to a dangerous virus circulating in Hong Kong, called Generally Reductive Economically Enervating Dementia, or GREED. If left untreated, it almost inevitably leads to full-blown economic deficiency syndrome, and can lead to the complete voluntary removal of one’s own cash, also known as a “cashectomy.”

Q: Is it infectious?

A: The Hong Kong Monetary Authority has numerous documented cases of human-to-human transmission. Certain sufferers have been designated “super-spreaders” by the medical community. They stand in clusters on the street holding brochures for new real estate developments.

Q: I see them in the shopping malls.

A: Avoid bodily contact. Whip out a hazmat suit if they approach. But you may already have the disease.

Q: What are the symptoms?

A: The first symptom is usually a gradual decrease in walking speed as the individual walks past the shop windows of property agents. Scientists believe that merely viewing the digits on real estate advertisements can cause the disease to start incubating itself. We advise the spouses of potential victims to use cattle prods to stop family members approaching property shops.

Q: Aiyaah! Too late for me. I often stop at those windows.

A: This is followed – often within less than a month – by a desire to read the property pages of newspapers or surf internet property listings.

Q: Is there any cure?

A: Yes. You actually buy an apartment and the investment irrationality quickly disappears.

Q: How come?

A: You don’t have enough money left to spend on anything else. And you can no longer afford my professional advice.