Sunday, 2 September 2018
Britain's 99-year leasehold on Hong Kong
OK, to be precise, only the New Territories was leased to Britain for 99 years in 1898.
Both the Hong Kong Island and Kowloon Penisula were ceded (freehold) to Britain in 1842 and 1860 respectively.
Would you for one minute shed a tear for Britain who, for more than a century, had invested and developed Hong Kong to what it is today; suddenly find themselves with an asset that has ZERO value once its returned to China in 1997?
And to think Britain had invested in big scale infrastructure projects like MTR, the new Hong Kong International Aiport at Chek Lap Kok Island, and that wonderful connecting airport express rail!
Ya hor! Its like doing a major renovation om your 99-year HDB flat when the lease is expiring soon in less than 20 years!?
Don't you worry. India was once upon a time the crown jewel in the British Empire. That's a sugar-coated way to say the wealth and splendor of London was built from the wealth transfer from India to Britain.
Make a wild guess when those mega infrastructure projects in Hong Kong were awarded, which companies got the tenders?
Want to bet whether China was concerned when Britain early don't build, late don't bulid, all of sudden decide to build the new airport to be completed only in 1998? Wink.
99 years is a long time. How much wealth (value) we extract from our 99-year leases is only limited to our imagination and creativity.
If we do nothing and sit on our asses for 99 years, who to blame if we got nothing in return?
From an investing perspective, if you can't figure out how to profit from 99-year leases, you may want to stay clear of stocks dealing with toll road concessions, port concessions, mining and logging concessions, oil and gas exploration concessions; etc...
Drum roll please.
And especially REITs!
Tell me how many of their properties are freehold?
So you not concerned one day the "assets" that are on leasehold will revert to ZERO?
Eh?
Eh your head!
If you are only superficially financially literate, please don't jio others to follow you.
Like what we like to say in Army, "Smart can oredi; don't act smart!"
P.S. Some of you may want to think for a moment why Britain "had to" return Hong Kong Island and the Kowloon Penisula when they are essentialy "freehold"?
Yah, its written black and white clearly they were CEDED to Britain by... who? The Qing dynasty!
I'll leave you alone to figure out the implications even when you have a freehold property, and what happens when you rely on promises made by people who are no longer around when its your time to collect. Wink.
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Hi Smol,
ReplyDeleteI get your message. It's how one squeezes the juice from the lease hold asset within 99 years. If one manage to squeeze enough juice from the said asset to cover the leasing cost, it does not matter on the status of the property.
Ben
Ben,
DeleteCompetent sportsmen take responsibility for their performance; weak players blame their sporting equipment.
Smol,
DeleteYou are right. It's the circumstance in which one makes use of the available resource and get the best out of it through hard effort.
Ben
Smol,
ReplyDeleteBy the same veins, not just reits hor. How about license expiry? Netlink license iirc correct is 2037.all liscense have conditions to be fulfilled, including banking and telcos.
But it's good that this discussion is up la. So that people squeeze earlier and not wait till too late
Sillyinvestor,
DeleteYes, a licensing agreement is similar to a concession.
The same goes for copyrights, patents; etc.
They are only worth money when we can still collect royalties. The moment the patents or copyrights expire, well, good luck!
The best planning means nothing when we're not in control of your own fate. 99-yr, 999-yr or landed property?
ReplyDeleteMarymount Terrace residents put up with years of inconvenience, drilling and pounding, and finally the Marymount Station (Circle Line) opened.
Plot twist :P
".. government officials turned up at about 25 terrace houses to serve land acquisition notices, informing residents that their neighbourhood would be demolished for the construction of the North-South Expressway."
Kevin,
DeleteSo much for freehold and legacy for children...
Don't talk about the living. Even the dead can't have everlasting peace...
Just "enbloc" my ah ma from Mt Vernon to Mandai columbarium last month.
When they built Mt Vernon, someone must have decided that area is very "ulu"; so good place to house our dearly departed. Don't waste precious Singapore land mah!
Eh? Change of mind to build a HDB estate there now? So that area no longer "ulu"?
If they enbloc Mandai columbarium in the future to make way for another HDB estate, confirmed we would have hit population 10 million!
Looking at the track record, I'll choose tossing my cremated ashes at sea when I die. I have no descendents; don't want to end up like those "unclaimed" cases.
That'll be my final act of defiance to those who like to tell me how to live my life. No way I'll let you disturb me after I'm gone!
Meow.
Smol,
DeleteBig Daddy likes to exert authority and influence on the common peasants like us. They say "Go straight" and no one dare to turn left and right and follow suit. The things which they mention and implement, are considered to be right and justified and expect the peasant to shut up and follow suit. Any deviation from the directives imposed by Big Daddy will face the consequence of various degrees.
Peasants will have a hard time going forward.
Ben
Ben,
DeleteIt must be said that we are lucky to be born in Singapore.
In one generation, we can move from peasant to landowner - definitely not anyone and everyone will make it, but infiinitely better than the nepotism, cronyism, corruption, and plutocracy we find in many other countries.
Its just me. I'm more of a small government person.
Hi Smol,
DeleteI prefer to be a humble and ordinary peasant living in rural outskirt, with minimal or no intervenation from the outside world.
Simple is good.
Ben
Ben,
DeleteI wish you well in finding your rural outskirt in Singapore...
Pig farm Choa Chu Kang is now HDB concrete jungle.
Poorest place to live Punggol is now "hip" with waterfront living marketing spin. Good, better, best case study example in how to turn sow's ear into silk purse! Marketing students take note!
Pulua Ubin could in the far, far distant future be developed into attas Sentosa Cove like private landed bungalow living, or maybe developed into another HDB heatland (which will be a waste to me)?
High intensity condo or HDB living will "destroy" the island's natural surroundings. I would think a good compromise would be to build very exclusive villas or bungalows there. Keep the numbers small and controlled.
The property tax collected can be used to pay for the park rangers to take care of the island, and provide free access to Singaporeans for their weekend nature escape ;)
Hi SMOL,
ReplyDeleteSaw a profound quote on InvestingNote regarding the 99-year leasehold issue. Sharing it here:
"Your own life is also a lease. Do you still not try to make the best out of it?"
Unintelligent Nerd,
DeleteSome believe this life is just a full dress rehearsal for the real living that will come here after. (Renting?)
Some believe they have all the time in the world as this iife is just one of many reincarnations forever and ever. Unless they have reached escape velocity as in Nirvana. (Freehold?)
I rather treat this life as a lease. Heaven and hell are right here and now. And when I die, I return to the state before I were born.
Stardust.
I guess what worked for me was having a healthy dose of cynicism.
ReplyDeletepatty,
DeleteI practice the Russian proverb that's made popular in english by Ronald Reagan:
Trust but verify.
back to topic, what are the ways one profit from 99 year lease
ReplyDeleteUnknown,
DeleteFor sure there are more than one way to skin a cat ;)
So you want to know the illegal or legal ways?
Let's start with that simple and popular legal way that many know but not everyone can put into action:
2 bites of the cherry?
Try this out for size before we talk about other advance techniques ;)
Don't ask me why, but some people are like vegetables; once planted cannot move.
i know some ppl combine 2 other factor to advance the cherry method and might render the actual cheery to be less attractive.
Deleteerr can discuss other advance method? legal or not so consider legal
Unknown,
DeleteThere you go!
You know other methods that are "more attractive" than the 2 bites of the cherry ;)
More examples will only be the same: "I know some people have done this..."
What's more important is whether you CAN and WILLING to do it. You not "others", "others" not you ;)
No point if you can't or unwilling right?
Instead of looking at others, why don't you try figuring out the various options for yourself?
I give you some hints.
Many of our farmlands and industrial lands are on 30-year leases. Pray tell how do the business owners make money during this time?
And any infrastructure developments to the land like factory buildings and irrigation works, all have to be depreciated.
Big daddy don't ask you to return the land to its "original" condition you would have saved a lot on the demolition costs alone!!!
You are already ahead of those so called retail "investors" from day 1 have the "lazy" view the property they stay in cannot be considered an "investment".
Some don't even include their stay-in property as part of their net-worth!?
This is a dead giveaway they stay in HDB flats!
LOL!
Thank you Sir, since many year ago i have been asking if hdb is asset or a liability with the many facet of investing via the capital method or debt method. One phase that come to mind is buy term and invest the rest.
DeleteUnknown,
DeleteNo need to Sir me; I'm only a man-whore.
Just call me Jared or SMOL.
We keep it casual around here ;)
We have not earned the "right" to say buy term and invest the rest if we only knew how to voluntarily contributing to CPF or transfer CPF OA to SA.
How is it any different from buying buying wholelife or endowment policies?
Its just another form of "forced" savings.
"Invest the rest" requires the competence of "can and willing".
This path is much harder and more daunting for many; hence not everyone and anyone can do it.
Have fun exploring the "earn more" path!
And if we can't make it, what's the worry?
There's always the plan B "save more" path waiting for us.
Heads we win; tails we win too!
At least we get to discover who and what we are made of in the process ;)
Cheers!
temperament,
ReplyDeleteWell, just as long we don't confuse investments with savings ;)
Buying a bond is an investment; putting money in a fixed deposit is savings.
Similar but different.
Bonds can have capital gains and losses; fixed deposits your capital is "safe" in nominal terms and provided what happened to Cyprus bank depositors don't apply here...
When we save, we don't expect to have capital losses (in nominal terms).
This nominal term thing is important; just ask the savers in Venezuela or Turkey. Or maybe our Indonesian neighbours?
If we are from countries with volatile currencies, first thing to ask when saving is, "In what currency should I be saving in?"
Now make a guess whether Singdollars will be strong or weak in 25 years' time? All of sudden, long term savings has become a "speculation"!?
So don't you worry about dangerous territory.
If we have another emerging countries crisis like our 1997 Asian Financial Crisis, it does not matter whether one is a saver, or investor, or speculator...
ALL of us will be in hostile environment!
temperament,
ReplyDeleteWhat can't kill us will only make us stronger ;)
We both same lah!
Got lots of battle scars on our bodies as proof ;)
I've learned from the bitterest way of learning - crash got sound!