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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: organicgerry who wrote (43613)	12/7/2008 10:27:20 PM
From: TobagoJack	Read Replies (2) \| Respond to of 217591

just in in-tray i am understandably enthusiastic for chaos and crisis, and i say squeeze the high end until it POPS ;0) what could be better, when one's deliberate low-end holdings are renovated and nearly fully let-out to formerly mid-end folks, and the highend of others is being squeezed to go pop, so that the cash flow from low-end rental can be used to support eventual leverage on imploded ex-high-end stuff. some kind of wonderful. Interesting comments from some friends over the weekend. 1 - Head of a large Private Equity Group's China investments said that the companies they have invested in have seen a 30% drop in EBITDA in the past 2 months alone. They are budgeting a 50% drop for the 2009 financial year as a base case, and an 80% drop in the bear case in aggregate for their portfolio companies. 2 - Another friend that sells lots of products to the US (a private co. that does business similar to Li & Fung), are budgeting a 75% drop in profits for 2009 and are concerned with the financial viability of "a few" of their US retail customers. Worried a bit about getting stuck with inventory in the pipeline if the retailer goes bust. Heard a rumor this morning that 3i, one of the larger Private Equity firms, is closing its Hong Kong and Shanghai offices. They will continue to maintain their Singapore and Beijing offices. I know nothing more than that, but it is interesting that they are closing what I would think are their two most expensive offices and leaving the two cheaper ones up and running for business. Low cost producers for office space and housing to win out as well as for retail products? And the SCMP published more bearish news, at least if you are a Hong Kong landlord. And where Goldman leads, most others follow: SNIP: US investment bank Goldman Sachs plans to eliminate local living allowance subsidies for its Hong Kong staff from 2010 but will continue to arrange and pay for housing for employees that relocate to the city, sources say. "If you want to bring in talent you have to find school places for children, a place to live, etc and you have to pay for that. That will always be true of any international city and it's the same as it is in New York, London and Hong Kong. That's not changing for anyone in the world," said a person familiar with the situation. What will change is the housing allowance that is unique to Hong Kong, a benefit most companies in the city offer to employees. At Goldman, employees had received that in the form of a separate monthly cash supplement based on their seniority. Now it would be incorporated into their monthly salary or become part of the annual bonus and dependent on the firm's performance in any given year, sources said. The monthly cash payment was unique to Hong Kong and as a result the bank decided to scrap it, particularly since Beijing staff had no such benefit. AND THE SCMP PILES ON: After rising steeply for the past two years, rents for prestigious residential properties in Hong Kong are tumbling, with landlords scrambling to grab good tenants as international investment banks lay off expatriates or cut their housing allowances. Property consultants expect rents for luxury accommodation, which were at record levels earlier in the year, to drop by 15 per cent in the fourth quarter of this year and fall a further 25 per cent next year. "The top-end luxury segment may even fall a bit deeper," said Anne-Marie Sage, regional director of residential at international property consultant Jones Lang LaSalle. She said flats costing HK$200,000 a month or more, usually rented to top management or regional heads of financial institutions, would be hit particularly hard. Those at HK$80,000 to HK$150,000, usually in Mid-Levels and catering to middle or senior management, would also suffer. "We have not seen any major cut at this point, as housing allowances are usually adjusted at the beginning of the year. But we will see this happen next year," she said.