Tips For Hong Kong Millennials Who Want To Invest In Real Estate

Millennials may have it just a little bit tougher than the previous generations when it comes to investment, but there are ways to do it successfully. There are a variety of ways that even Hong Kong Millennials can start investing in real estate. Like anything in life, it’s a step-by-step process. You can’t expect to go from no experience to becoming a millionaire overnight. You also have to take into consideration your job situation, financial status, credit store, and so on. Millennials, especially Hong Kong Millennials have been dubbed as the most lazy and spoiled generation there ever was, but if we look below the surface layers of Millennials’ consumer and investment behaviour, we can understand a great deal more than just what we see at the tip of the iceberg. Millennials are tech savvy, creative, resourceful, intelligent and most importantly, great opportunists. They need to be in order to keep up with the fast-paced speed of our increasingly digitally connected world. Things are always changing, new ideas and concepts are constantly popping up and they have had to learn how to adapt at a moment’s notice. There’s a negative message that millennials just sit on their butts and do nothing all day, but statistics speak otherwise, at least when it comes to property investments. 

Having a solid portfolio of high-quality and later luxury property investments can become a powerful wealth-building and income-generating vehicle for millennial investors, so it's no surprise that millennials even in a market as tough as Hong Kong continue to invest in real estate property to secure their future. The hardest truth about living in a city like Hong Kong is the astounding cost and standard of living. Hong Kong is one of the most expensive cities to live in, and currently the most expensive city to invest in real estate. Most Hong Kong citizens are even living pay-check to pay-check unable to put much into their savings. Also, since land is so scarce in Hong Kong, prices of Hong Kong properties for sale continue to increase. However, people choose to live in Hong Kong because of the many advantages of living in our beautiful city. There are certain neighbourhoods that Millennials can consider in Hong Kong that can help them save more for future investment opportunities. Areas in Southern Kowloon, Prince Edward, Jordan, Mong Kok, and areas such as Tin Hau, North Point and Fortress Hill are more affordable areas for the millennials income bracket. 

According to a survey conducted by Manulife Asset Management of eight Asian Markets last year, Hong Kong, China, Singapore, Indonesia, the Philippines, Malaysia, Thailand, and Taiwan - which included 1,400 Millennials, property and cash are the two major investments undertaken by millennials when planning their retirement, similar to that of their parents’ generation. 

Michael Dommermuth, head of wealth and asset management, Asia region, for Manulife Asset Management said during an interview with the South China Morning Post, “Millennial investors grew up in an era where they witnessed their parents having earned a lot from their property. It is only natural that they follow the same pattern”. He further warns that millennial investors should be cautious because Asian property markets in the following years may not repeat the same high growth that their parents experienced in the past decade. Here are the statistics from the corresponding survey:

• 51% of millennial investors across Asia want to buy property in their local market in the short term (higher than 57% for investors of all ages).

• Indonesia ranked top with 82% of millennial investors wanting to buy property.

• Taiwan ranked second with 65% of millennial investors wanting to buy property.

• Philippines ranked third with 59% of millennial investors wanting to buy property.

• Hong Kong ranked fourth with 53% of millennial investors wanting to buy property.

• Mainland China ranked fifth with 44% of millennial investors wanting to buy property. 

Hong Kong properties for sale and the economic status of the Asian markets have shifted since the baby boomers generation, which means that millennials looking to invest must also take a different approach to adapt. If you are a Millennial and new to investing, here are some of our top tips for you to start preparing for your first real estate investment:

Opt to Invest in Emerging Asian Markets 

Mature Asian real estate markets like Hong Kong and Singapore are slowing down, however, there are still emerging Asian countries such as Vietnam, Cambodia, and Indonesia. Another tip for millennial investors is to choose to diversify their portfolio and invest in different products and different markets to limit the risks involved.

Build Your Credit Score

Real estate investment is not something that you can start doing and perfect overnight. There are certain necessary steps that you need to take before you buy your first real estate property, and building up your credit score is one of them. Having a solid credit score will give you an advantage when investing in your own properties. You need to understand your personal needs and finances first if you want to start investing. If you don’t even understand your own financial status, you won’t be able to come up with a thorough plan to become an investor. You have to understand your financial needs and purchasing power fully, and then from there, make sure to only invest within your means. When you have a clear understanding of your personal needs and finances, you can avoid making rash and impulsive decisions that could put you at high risk. 

Prioritize Saving

All successful investors understand the importance of saving. Not only will this teach you the value of being financially conscious, but it will also serve as a stepping stone for you on the path to becoming a property investor. The first step to investing is the accumulation phase - when you put away portions of your money for future growth.

Confidence is Necessary for Success

The fear of failure is the main factor that stops most people from ever starting to invest. However, failure is a part of investment, and you learn your biggest investment lessons through failure. You need to believe in yourself, have a vision and work hard to achieve those goals. It’s not an easy journey. If it were easy, everybody would be doing it and we would all be multi-millionaires and billionaires. You are going to hit some dead-ends along the way and make your fair share of mistakes, but the most important thing is that you will learn from them and become wiser going forward. As Tony Robbins famously said, "Execution trumps knowledge”. Having knowledge can be powerful, but if you never use and execute that knowledge, it is of no use to you.

Start Networking

An important aspect of business and investing is networking - getting to know the right people and surrounding yourself with like-minded people who can help you grow. If you want to learn about an industry, what do you do? You get your feet wet and you experience it first hand. Mentors and seasoned professionals can tell you as much as they can, but you won’t truly understand the ins and outs of the industry unless you experience it yourself. In the real estate world, it’s so important to meet and get to know the right real estate agents, contractors and other property investors who can help you learn about the industry and broaden your professional circle. Real estate is a team business, and you need to surround yourself with a solid team of people that you can work with. The best thing you can do for yourself is to start building that team before you even start investment. The more contacts you know, the easier your path to success will be.

Follow Your Logic

There’s a wise quote that everyone, including investors should follow - “Don’t ever allow your emotions to overpower your intelligence”. When investing, it’s easy to make decisions based on your emotions instead of your logic. In real estate, new investors tend to make this mistake. They follow their heart instead of their head and that’s how they get into trouble. You want to be objective about your investments, and see it for what it is. Getting professional advice is always a smart move when it comes to buying property. Investments aren’t about emotions and gut feelings - it’s about numbers, the returns. It’s about doing the math and calculating what’s feasible. 

Study the Market

In real estate investment, it’s so important to do your research before you take any sort of action. You need to understand the market and you can’t understand the market if you don’t study the market. People think it can be a quick source of passive income, and that they can do it by chance or luck. Planning and researching the market and industry thoroughly will help you to minimize the risks involved and save you from losing all your money. 

Investment can be rewarding but you need to know how to do it right. It’s a numbers game,and you need to be smart, and you need to be resourceful. Don’t let the excitement of investment get to your head and forget all about planning. Studying the market involves a lot of factors - from finding your target price range, seeing what properties in that price range sell, how long those properties take to sell, and much, much more. You also need to take into consideration the neighbourhoods and real estate markets in your chosen locale, and then look at all the factors that can make or break your investments in this targeted region. Neighborhood factors can include things like public transportation, school districts, and so on. Investment in real estate is real life, and without proper understanding of the market, you set yourself up to be in a very vulnerable and fragile position at risk of losing millions of dollars and even going bankrupt. 

Are you serious about becoming a real estate investor in Hong Kong? Reach out to our professional team at Engel & Voelkers and speak to the best online estate agents to help guide you through the process. We are here to help you!