Hong Kong is an amazing place. It is so active, modern, clean and productive. Our Asia staff and I are here this week visiting with prospective clients and customers. It is amazing to see how small this world is and the number of Hong Kong based investors possess property in Hawaii, as we share information on clients we support. The Hong Kong Real estate market has some similarities. Their economy has been impacted by the financial crisis, and investment earnings are currently following the exact same trend. Cap rates are up and rents are expected to ease off in the coming months. That is where the similarities end. Rates of return in the first year of possession Cap prices have gone from 3.5 percentages last year to 5.0percent annually. Borrowing costs are hovering around 6 percent, so investors for these high quality properties are ready to accept negative leverage, which differs from our market.
With the China adjoining, they feel a future to come though is a blip on the horizon. The talks here this week have been based on a GDP that’s shrunk to a 9 percentages annual rate and the question is, will China loan its 1 trillion dollars in surplus capital to the IMF or will they use it in a different way to improve their worldwide financial position? There are still Projects under structure and development here. It appears that they build skyscrapers than anywhere Las Vegas. In front of the hotel is a building site which was part of the harbor. Next to the JW Marriott, a luxury resort is just coming. We have been riding the clean rail system to Disneyland around the city and out all.
Retail projects are Effective in the most busy rail stations. With 75 story glass and steel towers feeding clients the retail is magnificent. All the big brands are here. The shop type that is most noticeable is smaller than in the countries. What these shops may lack in depth of product that they make up for in service. They promise to get it delivered to you and call out for it, if the store does not have your thing. It is great to travel and see the world with broker in Hong Kong. It reminds me of something that a friend of mine Says, Many people have more money and more vision than us. Seeing the growth, prosperity and continued development even today of enormous architectural icons being constructed on what was sea six months ago is inspiring.