A bid for future
In the past few years, D&G has talked about the interesting positive correlation
between Chinese New Year fair stall bid prices and Hong Kong residential
property prices: property prices in the coming year show the same trends as fair
stall bid prices. In last year’s auction, the average CNY fair stall bid price fell
25% to HK$14,640 with 11% of the booths unsold. The results were reasonable,
as the economy was in turmoil. At the same time, the low bid price also paved
the way for a recovery this year.
What is the prediction for next year? In this year’s auction, the average CNY fair
stall bid price jumped 61% to a record of HK$23,514 with all the booths let out!
The flagship food stall was let at a 10-year high of HK$490,000 for seven days,
40% higher than last year. The cook needs to sell a bowl of fish balls in every
two seconds in order to breakeven.
The fair stall bid price predicts further upside of Hong Kong properties in 2010,
cheering on our Hong Kong Research Head Cusson Leung’s positive view due
to the economic recovery and income growth. This favourable prediction should
please the property agent Midland (1200.HK, HK$6.26, NR) and property
owners, whereas the HKSAR Chief Executive needs to work out how to deal
with the mounting concerns about the potential contagious effect of the surging
luxury properties on the mass market. On the flip side, if the players fail to make
money on the expensive fair stalls in the upcoming CNY, will the surged bid
price fall next year, which would indicate a property downturn in 2011?