With investment comes reward, and for Charlotte Aerts’ 6 month tenure with Engel & Völkers HK, the reward was clear. During her time in the Mid-Levels office, the young business student actively engaged in all the functions of a luxury real estate agency, providing her with the foundation for her MBA with the London School of Economics. The first week introduced her to the framework of a business organisation, where colleagues combined in brave camaraderie to tackle the flow of client demand and back office functioning.
Marketing, public relations, accounting and business analysis occupied Charlotte’s time as she assisted each of the department managers with researched and self-produced material. Heavy involvement in spreadsheet production, with financial analysis and projections forming key objectives during her internship. There was engagement with clients from international backgrounds, broadening her people and service skills. Constant correspondence with department executives maintained a steady reference point to develop an all rounded skill set.
Charlotte’s paper at the LSE combined with first hand property knowledge from her internship, examines the relationship between factors such as household income, population and land supply. Land supply restriction is often thought to be the key cause for rising property price, as a product of demand exceeding supply. Just think, how many times have we seen children fight over a few toys? Charlotte’s paper finds that small increases in supply do not affect house prices noticeably.
For all of us watching Hong Kong’s recent property price soar, the end is near, or now. With the US recently tightening its interest rates, Hong Kong’s peg to the Federal Reserve currency has seen more miserly spending and cautious decision making, resulting in stagnating property prices. Furthermore, experts indicate a fall of 5-10% in mass residential property pricing with a lower 0-5% decrease for the luxury sector in 2016. Adding to this effect will be the increased supply in popular residential areas such as Yuen Long forming an exodus outstripping demand. This has curbed off a recent few years of rising property prices, potentially providing relief and opportunity for previously searching home-buyers.
Her research found that Hong Kong’s government firmly controls property pricing through its leasing all its land; releasing only by way of public auction, tender or treaty grant. Only 6.9% is for housing, and coupled with governing of land redevelopment, we can see how prices of already scarce residential property are manipulated.
Despite Hong Kong’s notable free economy, the government has needed to implement strict measures in order to curb speculative activities. The approach is three pronged: introducing/changing the rates of stamp duties, altering land/subsidised housing supply and implementing new mortgage financing regulations.
Charlotte’s time with the principal of Engel & Völkers HK yielded a clear perspective that although the government has effectively implemented methods of intervention (i.e. alteration of land supply and supply of subsidised housing), there is room for improvement.
Charlottes’ statistical findings from the first quarter of 2015 determine that Chinese investors aren’t finished with property acquisition. Chris similarly predicts that Hong Kong’s home prices will significantly change only when supply outstrips demand.
An internship at Engel & Völkers HK may seem like a far off ideal but the experiences and perspective in working in a diverse and international office provided Charlotte with a foundation and skill set which has set her up for the future success.
In the end, she concluded that the real estate sector is unique and many diverse factors influence prices, beyond the conventional demand and supply side.
If you are interested in reading the completed version of Charlotte's thesis, please click this link to download bit.ly/1U8Xh1L