Keep eye on property friend's basic instincts

While CK Asset's Justin Chiu Kwok-hung is reputed to be the city's "God of Property" due to his pricing strategy that is often ahead of the curve, former Executive Council member Franklin Lam Fan-keung is probably the other one homebuyers need not look beyond for a sense of the market.

Lam was reported to have been rather active in the secondary market in recent months, selling a number of his units for enviable gains as many owners suffered from moderate to significant losses.

The former political figure seems to possess an instinct in timing, which is important as choosing the right time to act can make a real difference.

According to media reports, Lam - also known as the "good friend of property" - has sold three luxury properties in West Kowloon since last October.

The latest was a three-bedroom unit in Sorrento at Kowloon Station which sole for HK$28.6 million to book Lam a gain of HK$18.3 million.

The other two were a duplex unit in Island Harbourview at Olympic Station and another one in Sorrento. These two were sold for a total of HK$57.88 million to book him a hefty HK$33.2 million in profits for the two.

In hindsight, Lam could have made more if he had sold them a year or two earlier.

For example, a similar three-bedroom unit in Sorrento sold for roughly a fifth more in 2020 at the peak of the market.

It is interesting that, while Lam has managed to secure enviable gains from the transactions, the successive sales appeared to have been contrary to his practice in the past when he waited to shop the "bricks" when the property cycle was downward and sell them at or near the peak.

This was probably when he earned himself the "good friend" nickname.

Lam was reported to have snapped up a total of 45 units from 1999 to 2009.

What was special about that 10-year period? One may readily recall that Hong Kong was battered by the notorious Asian financial crisis and the SARS epidemic during the first half of the period, then hit badly by the financial tsunamis in 2008.

In 2012 after he was appointed to the Exco, Lam declared in accordance with the Exco rules that he then still owned 27 properties.

His recent spree to dispose of some of his pricy portfolio appeared to have deviated from his past practice given that the sector is currently in a downward cycle.

Were past experience still valid, he would have been expected to wait to shop for "bargains" rather than acting aggressively to sell the investments.

Could it be that the "good friend" is no longer as "good" and is anticipating more room for property prices to go down despite correction that has been made in the sector so far?

The development is not inconsistent with a new trend that is seeing a substantial increase in the number of homebuyers forfeiting deposits. In the first quarter of this year, the number of forfeitures rose to 159 cases - about 60 percent of the total recorded in 2023.

Since CK Asset's Chiu sold Phase Two of Grand Jete in Tuen Mun, the tone has been set for the property market.