Funds needed within 1 yr. – HKD20,000,000 (by the end of 2012)
Funds needed from 2 – 5 yrs. HKD40,000,000
Funds will be used to finance, together with mortgage loans, the purchase of prime retail shops mainly in HK, and secondly shops in Mainland China.
Required yields between 6 – 8 % per annum, excluding asset appreciation (currently only 2.5% !!)
We are looking for 80-90% injection, i.e. with other investors taking up 80-90% ownership
Our task is to perform site visit, identify opportunities, negotiate with owners and obtain bank loans. Target purchases will be presented for approval before placing deposits. A HK Co. is to be incorporated by a recognised audit firm, which would deal with secretarial, accounting, auditing and taxation of the company each year.
A mutually approved firm of solicitors to be appointed to handle all S&Ps.
Bank accounts be controlled by joint signatories and monitored by internet banking.
A board of directors to be consisted of 3-5 directors.
Why retail shops?
Retail shops investing are quite different from that of residential and offices in several ways
Each is unique and are in limited supply
Their prices vary tremendously with the state of economy and government’s policies. i.e. a shop in Causeway bay which was asking for HKD70M in 1997 was asking for HKD9.2M in 1999, and was recently sold for HKD94M.
one needs an in-depth knowledge of the area of search, often right down to the part of the street the shop is located
The risk is the market is not always 100% transparent; this gives rise to rumours, questionable lease agreements, the reliability of the agents. Opportunities, hence, exist for exactly the same reasons.
The retail shop market is dominated by a number of the richest groups in HK.
Retail shops market in the Mainland is still a young market, but which is a more complicated one, with ownership being an important issue. As always, it is not advised to venture this market with a large investment outlay initially. But one cannot ignore this market completely.
We have done some transactions in our name during the past 15 years. Below are some examples.
– Shop in Wanchai bought for HK$5M in 2003 sold for HK$13M in 2008
– Shop in Wanchai Hennessy Rd bought for HK$7M in 1995 sold for HK$16M in 2008
– Shop in Kowloon City bought for HK$5M in 1992 and sold for HK$19M in 2008
– Shop in Hong Kong East bought for HK$5M in 1989 valued at HK$50M now
– Shop in Kowloon City bought for HK$5M in 1991 valued at HK$26M now
And these are not the most prime located retail shops. We need extra capital injection for acquiring more prime retail shops. We are bringing in new investors now as the game has changed somehow.
Why not buy now?
– Too risky to buy now.
– Yield at prime areas down to a petty 2%
– Rents in absolute terms seem to have hit ceilings, as some tenants (even brand tenants) are struggling to make ends meet, partly due to inflation and minimum wages.
– Therefore, we are using this period of time to gather our buying power and wait for opportunities in the next 2 to 3 years.