Conducting proper research can be key to a successful real estate investment as it has a huge role to play in several ways. That’s why it is important to know where and how to get the correct information since data is often inaccessible to many. Therefore, we decided to cover this topic with Anthony Wong, a real estate research expert.
- Methods & sources that investors should leverage
- The process of assessing the different type of projects
- When conducting research in emerging market
▶ Connect with Anthony:
▶ Source & Supporting:
Colliers International: https://www2.colliers.com/en
Real Capital Analytics: https://www.rcanalytics.com
Buildings Department: https://www.bd.gov.hk/en/index.html
Data Centre: A data centre is an enclosed space where everything related to data is stored and handled inside mass number of computers, devices through many servers and networks.
APR: APR or annual percentage rate is the percentage of the amount that the borrower needs to pay to the lender per year.
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Alright, let’s get back to the transcript of the show. Enjoy!
[00:00:00] [00:00:00] Darren Wong: [00:00:00] Well, Anthony, welcome to the show.
[00:00:04]Anthony Wong: [00:00:04] Hi, it’s a pleasure to be here.
[00:00:06] Darren Wong: [00:00:06] Yeah. So, I think we met a couple months ago
[00:00:10] through our friend Gary from a RealInflo. And then I remember when we talked about having the show, and then your background is very good
[00:00:20] because our show is about helping audiences to learn about how to make better judgement, and better-informed decisions when it comes to real estate investing. So, if someone from your background have
[00:00:30] the knowledge professionally, and have a very broad view of different location, how to think about investment is something that I’m really happy that you’re here to share with everyone here.
[00:00:40] [00:00:40] Anthony Wong: [00:00:40] Yeah, certainly. I mean, it’s a pleasure, get to know to Gary, who actually worked in my company before he came in and did a little
[00:00:50] presentation and modelling about his business line, RealInflo. If you haven’t checked out it, it’s a real estate platform, basically an extract of different real estate
[00:01:00] information, combining every data platform into one. Yeah, to start off with I’ve given introduction of myself. I’m Anthony Wong. I’m currently a research
[00:01:10] manager at Colliers International. My education is that I have a master’s degree in real estate development. And previously, I’ve worked in China, and US
[00:01:20] and now in Hong Kong. And I’ve worked in developers, which is client side and the consultancy side. I’ve also worked in several smaller startup side projects
[00:01:30] previously, when I was interning during my university. So, for my current role, my responsibilities include writing research reports, managing
[00:01:40] database, as well as supporting a local team to execute client projects. So, every single quarter, as you know, there’s four quarters a year, and we have to produce
[00:01:50] four reports per year, including retail, industrial, office and capital markets. So, one of the more interesting projects, which we’ll talk in a later
[00:02:00] episode is that data centre, we’ve recently published a research radar report on data centre market in Hong Kong, about smart technology, IOTs,
[00:02:10] and how that is driving demand of higher data usage and what kind of sectors is changing in the upcoming years because it is gaining a lot attraction. And
[00:02:20] we’ll talk more about that in terms of industrial conversion, development, acquisition in the later chapter. But I’m happy to talk about my experience background. And now go back to you, Darren.
[00:02:30] [00:02:30] Darren Wong: [00:02:30] Yeah, well, thanks for sharing because, I think when we prepping the show, and then you talked about we start with having one episode about how to do a better research, how
[00:02:40] to understand about investing overseas or locally. And then you mentioned data centre, where same time is that a lot of my friends are looking to data centre to invest or look into how to
[00:02:50] restructure it, which that’s why we dedicated for two different episodes for this. So, let’s start with the research side, because I think the information is interesting. So, for the
[00:03:00] audience who might not be familiar, would you mind explaining what a real estate researcher does? And what a typical day would be?
[00:03:07] Anthony Wong: [00:03:07] Yeah, for sure. I mean, in real estate
[00:03:07] Anthony Wong: [00:03:07]當然可以。我是說，在房地產領域
[00:03:10] research, you really get touch upon in different areas of things, not only just in real estate, you have to understand economics, stock market,
[00:03:20] interest rates, all kinds of stuff. So, you have to be really, really aware of what’s happening in the economy, and everywhere, basically. So typically, I start off my day with reading
[00:03:30] a lot of market news, like Bloomberg, Routers, SCMP, HKEJ, or even local news like that, just to get a sense of how the economy is doing that
[00:03:40] day or that quarter or that month. And after just reading news off it, it really depends what kind of project I’m working on. For example, in the
[00:03:50] past quarter, we published four quarterly reports, if you haven’t checked out, go to our Colliers International website, and it has the four sectors indicating
[00:04:00] how the market is doing. So yes, the four core markets we talked about is office, retail, industrial and capital markets. For office, it’s really, for us,
[00:04:10] as a researcher, every single month, we have to go through monthly meetings without brokers to understand how the rental changes are doing,
[00:04:20] what are the tenancy arrangements, what the vacancy rates, who are moving in and out of these new leases. For example, in Central and core areas in the past couple of
[00:04:30] months, seeing a lot of changes because of the trade wars, the COVID-19, all that kind of market turbulence going on. So really keeping
[00:04:40] close intact with the brokers, with the market players is really important on our daily flow. In terms of retail side, yes, you have
[00:04:50] to get in close touch with the brokers, but not only that, you have to do a lot of self-research. So, for me recently, I published retail reports. We have to
[00:05:00] understand retail sales, we have to understand exports, imports, where are the sort of goods coming in, and how are the vacancy rates responding to
[00:05:10] that. And also understanding incoming travellers, visitor travellers demand, when you look at it, almost 70 to 80%, back then all the travellers are from Mainland China,
[00:05:20] so they buy a lot of luxury goods. But now the trends are changing, it’s more like necessities, supermarkets are doing really well. No longer luxurious goods are doing well in the market right now. So
[00:05:30] really being able to, and that’s why going back to the point reading market means understanding how the economy is going and reflected a research report. Industrial, as I talked about, it’s going through a
[00:05:40] lot of changes as well. As you know, as a lot of people do know the supplies really limited. It’s not as substantial as
[00:05:50] residential, where there’s a high demand, but industrial is going to go through a big change in terms of the higher demand for data centres, the higher demand for higher
[00:06:00] quality industrial buildings, and a better location in support of that. And lastly but not, capital markets. That used to be one of the largest revenues [00:06:10] stream and consultancies, really trying to find big buyers. I mean, you can buy a billion dollar, a
[00:06:20] billion-dollar transaction and be a broker, and in between, you can get a big commission and back, it gives the companies a big portion of revenue during good times.
[00:06:30] But in tougher times, it’s tougher. So, the capital markets right now we’re really trying to help them to find distressed assets. Selling, advising our capital markets team to
[00:06:40] advise the clients where to buy properties. Hotel sector is a good one, because hotel is really having really low APR rate. So, giving them a really
[00:06:50] good perspective and good direction in terms of how they deal with their clients and giving them a lot of resources is what I do on a daily basis. And I’m
[00:07:00] really happy to be part of the team and giving support our various brokers team.
[00:07:05] Darren Wong: [00:07:05] it sounds like a lot, a lot of reading and understanding. Because not only there you are being an
[00:07:10] economist, you’re being on the ground, talking to someone like broker in the forefront, and then you have to keep learning every single day. And not only real estate, right? Because real estate is a
[00:07:20] big, big sector, but then the ecosystem with stocks, equity, debt, there’s so many neurons that you have to juggle with. And obviously, like not all the audience
[00:07:30] had the luxury that they can sit down and learn about these things every single day. But then it seems like it’s good to have someone like you to weave out and say, “hey, let’s make something very simple, ABCD,
[00:07:40] how to do it,” and then maybe, in the future, you become a researcher, you can do a lot more of that. So, being in the professional firms, what are some sources of knowledge that you can access
[00:07:50] to, which the audience might not gain access? Or have a harder time to have those knowledges?
[00:07:57] Anthony Wong: [00:07:57] Yeah, for sure. I mean, as a researcher, we
[00:08:00] do you have access to certain amount of knowledge that the public don’t have. But actually, majority of the resources that we do get is actually free to the public, and
[00:08:10] just that the public are not aware of it. So, for example, besides our internal database, which we support our rentals
[00:08:20] and vacancy every single month, for our office grade A brokerage team, which we provide different kinds of data. Yes, that is really kind of hard, difficult to
[00:08:30] retrieve because we manage our in-house database. But on top of that, things like land supply, land tender sells, those are all available in the market, for example, in the
[00:08:40] lands apartment, you can go on the land sale section, and there’s different kinds of land tender documents, and you can look at different past bidders who bid at the land,
[00:08:50] and what are the sort of trajectory. For example, most recently, there’s a lot of Chinese buyers, as you know, China Mobile just purchased an industrial site in ShaTin, a couple more sites
[00:09:00] in Tuen Mun that various other Chinese companies. Understanding they’re not out there, but you just have to dig deeper into these websites. And
[00:09:10] another one is, if you have a piece of land, for example, investor, where do you go about to start up beside higher concern? Before you do due diligence, you can go on planning
[00:09:20] department about outline zoning plan portal, which kind of shows you what are the limitations, restrictions regarding that area, for example, building heights, for example,
[00:09:30] zoning, for example, how many GFP that’s allowed. Plot ratio, that’s a good one. Really, it’s really available out there, but it’s really finding the sources. Another
[00:09:40] resource and knowledge that I gained access to, which a lot of people have heard of, is Real Capital Analytics. And that’s a subscription platform we do. And it’s mainly in
[00:09:50] support of various valuation teams that we do have. And also capital markets team, for example, understanding what the recent transactions. What are the transactions that went over 4
[00:10:00] billion dollars, for example, and what kind of market we are going for that specific lump sum or what the client is requesting. Another free
[00:10:10] platform, RCA, obviously, the one I talked about requires a sign up and you got to pay for it. But another free platform, I would say it’s really looking at the
[00:10:20] rating evaluation department, which they have a popping market statistics. We have all kinds of resources out there that could show you the trajectory of the
[00:10:30] rental and capital value market flow. Another one is also the Buildings Department, if you want to look at the go-to-completion where the
[00:10:40] progress instead of going on site and actually check out what’s going on. Actually, buildings apartments show you what are the progress in the development by telling you
[00:10:50] what kind of structure phase they are in. So, I think really this be resourceful. A lot of information is for your benefit, and the government do a really good job in terms of maintaining it. It’s really going
[00:11:00] out there and find it and really have a strong, and maintain your own database, for example, what kind of sectors you’re going for, maintain it and have your own database in terms of going forward. I’m sure different
[00:11:10] consultancies have different database, of course, but generally, they should be consistent in terms of the objectives supporting their local teams or their investment.
[00:11:18] Darren Wong: [00:11:18] I see. I think
[00:11:20] there’s a cool idea that was just in my head is that, in the end of this whole show, what we can do is to have some links, and some kind of guidance to people where they can find these data. And even the
[00:11:30] report you said just now about what you have issued recently, and so on, put them all on the show notes. The other cool idea, I mean, there are a lot of times
[00:11:40] because I used to be working in the real estate fund, and there are reports that we know where the reports are. But a lot of people, let’s say for the audience that might not be familiar real estate, just don’t know where to go. So, I think that
[00:11:50] even though having this kind of episode, pointing out, and then having those kinds of things in the show notes to tell people where they can get, is kind of useful. So just like what you said, there
[00:12:00] are a lot of different information and methods and sources, right? What kind of audience should leverage and then use it when it conducts market research analysis easily at the [00:12:10] moment?
[00:12:12] Anthony Wong: [00:12:12] Yeah, what I talked about leveraging is really about being resourceful. So what I talked about previously, besides some of the
[00:12:20] sources that I’ve mentioned previously, is really interacting closely with, as a researcher really, interacting closely with
[00:12:30] local brokers and consulting agents, and getting deeper insight in terms of, besides these data from this information, what is the story behind driving these data?
[00:12:40] For example, if the yields are coming down, or the capital values are going up, what is the reason behind it? Is it because
[00:12:50] buyers are withholding the asset price, at the same time the flexible lowering the rental prices? There’s all kinds of a trajectory that
[00:13:00] explained the underlying story behind those numbers. Really kind of doing both qualitative, which I talked about interacting with the people on ground, and
[00:13:10] quantitative, which is getting the information from the platform. And what kind of storyline and what kind of trajectory, what kind of POV you giving into
[00:13:20] your research reports, and your local brokers team and your local valuation team? And I think there’s a lot of specific indicators out there: GDP,
[00:13:30] employment market stock prices. These are great. But there’s got to be some relation back to the real estate market. What is the story telling?
[00:13:37] Darren Wong: [00:13:37] I see.
[00:13:40] Would you mind explaining and providing a walkthrough on a process of different kinds of projects that you can start with, like you found on project new-built and second hand
[00:13:50] assets. Because I think it’d be good idea to give people a framework and say, hey, if you’re looking for deployment project, this is the framework pretty easily how to find resources and maybe new built and see
[00:14:00] second hand assets.
[00:14:02] Anthony Wong: [00:14:02] Yeah, I think they’re quite different in terms of new development,
[00:14:10] development project, new buildings, secondhand asset. They’re managed by different investors, different operators, sometimes in private equity they you do it all.
[00:14:20] But I think development project, I think you start off with, well, I’m a researcher myself, so I’m going to give you a researcher POV, not from a developer
[00:14:30] view. So, as I talked about, really go through the lands department seeing one of the attendant notices by the lands that have been issued by the government right now.
[00:14:40] Being aware of the policy address, the budget reports, sometimes they talk about, oh, we are aiming, for example, this year, we’re aiming for
[00:14:50] 80,000 residential units that’s being injected into the market. And obviously, realistic speaking, how much of that is actually being injected, how much of a goal, so you can analyse
[00:15:00] that in the past historical performance and see, okay, just because the government said 90,000, actually, in the past, there’s only half that’s been issued for it because of different restrictions
[00:15:10] and time delays and development projects. So, understanding a market from these public platforms, I think newbuilt same as development
[00:15:20] project, look at the buildings department, look at the construction timeline, we, a lot of consulting firms manage their own
[00:15:30] supply pipeline. So, when it will see when are the buildings being completed. That’s really, really important. And see when is a timing coming in, where’s
[00:15:40] the liquidity going? I think, in terms of second-hand asset, that ranges quite a lot. It’s really about the
[00:15:50] investment side, and the investment side of second-hand asset, is really about knowing your market links. For example, in the capital markets team, it’s really
[00:16:00] knowing in depth connections that could lead you to some lucrative transactions. And as a researcher, we just have to analyse what are the great
[00:16:10] transactions in the past, and how that reflects the value of that specific client is buying. So, we give as much information as we
[00:16:20] can in the second-hand asset market and let them decide where are the good project to go for some transaction?
[00:16:28] Darren Wong: [00:16:28] I guess [00:16:30] that’s pretty informative as people framework how to think about it. So, when we met up a couple months ago, and I think that we talked about your
[00:16:40] experience in Greater Bay Area when you are researching in the area, and focusing on that, and I think it’s a great idea to use that as a use case to talk about how to conduct research in the
[00:16:50] emerging markets because a lot of audience might be interested in Malaysia asset b&m asset, and obviously, you’re more in the Greater Bay Area. So I want to talk about your experience with that.
[00:17:00] How is the experience with conducting research in emerging market like the Greater Bay Area? How does that process, is it different than having developed area, is it really hard to find information, many more?
[00:17:11] [00:17:10] Anthony Wong: [00:17:11] Yeah, for sure. I mean, I was in China about a year or so. And really on the south side of China, which is the Greater Bay Area, which they call it.
[00:17:20] So these cities included two core cities and nine other second tier cities. The two core, obviously, Shenzhen and Guangzhou, which my offices were based at
[00:17:30] when I was conducting research and advisory business there from another consulting firm. I think it’s a lot different doing research and doing development in China,
[00:17:40] because in the sense that as a researcher, marketing transparency is not as great as Hong Kong. For example, maturity of real estate market information is really, really difficult to retrieve.
[00:17:50] There’s no united platform, as I talked about things like EPRC, which shows all the transaction for not that expensive
[00:18:00] mountain subscription fee, or lands apartment or buildings department where you can just go directly and get the information. And so I think transparency is really a one big thing. They
[00:18:10] do have a platform called CREIS, which is the China Real Estate Intelligence System. And that is a hefty heavy price subscription allowing real estate
[00:18:20] petitioners to gain access to, for example, land values, residential transaction. But again, the downside is that how much of that data is accurate in China, because
[00:18:30] sometimes data has always been something that we as a researcher is concerned about. So, doing real estate research, compared
[00:18:40] to Hong Kong, takes a lot more time in the sense that we have to, instead of just relying on the data, sometimes you have to go on site and verify, is this project completed, and is this
[00:18:50] development actually has that much of a tendency in terms of vacancy. So when I was working and travelling between two cities and
[00:19:00] Shenzhen, give you an example. My team members and I have to visit a lot of undeveloped office sites. For example, in Guangzhou and the south side, there’s a
[00:19:10] second tier city called Foshan, luckily, we had a company car so we can go there, but we have to actually visit these retail sites and see
[00:19:20] what other vacancies going on there. And we have to talk to local brokers to understand what are the situation that’s been going on in the market in terms of retail,
[00:19:30] walking through different models and analysing the guesstimation of what the vacancy rates are because it’s hard to really, really retrieve those data in
[00:19:40] China. So, I think doing research in China requires a lot of time, patience, years of experience, being in the market
[00:19:50] and really swimming along it and having deeper connections with the local investors. When you thought about doing China, relationships number one really important.
[00:20:00] So these clean market players, they give you a lot of insights in terms of making the job a lot easier.
[00:20:06] Darren Wong: [00:20:06] I feel like we should ask Gary just to find the data for us,
[00:20:10] because there is so much hassle. And then I think there’s similar stories that when people told me about, when a couple years ago, half a half a decade ago, they
[00:20:20] went to Vietnam or Malaysia, same thing is that like, they have a very, very hard time. And obviously, right now because the demand is so high, they start building the whole infrastructure of data and information. But before that was
[00:20:30] really that, even you want to find out what’s going on, you got to be fly all the way there, be on the ground, you have to have two hours car ride, bumpy car ride, really measure
[00:20:40] every single thing to know what the hell is going on, because the data wasn’t there. So I think these are things that like office for emerging market, that’s the tricky part. And then which comes to
[00:20:50] the next question. What are some tips and insight you will share with the audience, especially when it comes to locally and abroad? Or in this case, emerging markets when the data is not as available?
[00:21:02] [00:21:00] Anthony Wong: [00:21:02] Yeah, I have worked in China, wouldn’t say a long time, and Hong Kong, a little more familiar with. I would say,
[00:21:02] [00:21:00] Anthony Wong: [00:21:02]對，再熟悉一點，我就不會在香港工作了。我會說，
[00:21:10] doing good research is about do what you can, honestly. Be open minded and resourceful, and talk to as many people, so if you want to go to a different
[00:21:20] country to do your investment, not just only ask a couple brokers, is this a good site to invest or are you took a plane trip there, and then
[00:21:30] “Oh, I like this place, that seems like a good vacation place”? But also really knowing the people, real estate is about community. So knowing what kind of location that
[00:21:40] you’re intended to invest? What kind of community residents that gives you the sense of safety, sense of good education, good school boundaries? These are really, really important. And really make use of
[00:21:50] the resources that is provided by the local government. And Hong Kong, we’re really privileged to have a lot of resources that is issued out there. For emerging market, not so much, so
[00:22:00] sometimes you might have to spend a little more time, a little more money, and a little more liquidity in terms of knowing the market or even worse. But the upside is that there’s more gains on
[00:22:10] top of saturated market like Hong Kong. Second of all, be really analytical and insightful. How to spot trends, as I talked about really read a
[00:22:20] lot of market news. Sometimes this news might give you a really good suspense, but how much is that actually reflecting the market, right? So really be
[00:22:30] critical in terms of some of news outlets. And also, be both quantitative and qualitative. Don’t just rely on data, rely on talking to different people and
[00:22:40] understanding where the sources are coming. At the end of the day, you really start off real estate. Because real estate, everything
[00:22:50] is about location, right? So really understanding the locational context of it, from transportation, to building
[00:23:00] highways, to geopolitical stability, to Macro, all kind of stuff. I think these are all really essential in terms of investing elsewhere in a place that you’re not
[00:23:10] familiar with, for example, in emerging markets.
[00:23:12] Darren Wong: [00:23:12] I think there’s a very good takeaway, because that’s something it’s easier said than done. It is a lot of homework, but you’ve got to do it because you’re
[00:23:20] putting years of savings into something that you might not get return or get a good return that is expected until years afterward. So before we jump into the
[00:23:30] data centre topic for the audience, maybe it just ends right here. How would they return to you to find out more about your work and yourself?
[00:23:40] [00:23:39] Anthony Wong: [00:23:39] Yeah, for sure. So really, our work is really publicly available. You know, a lot of people don’t make use of it. We do a lot of consulting projects that you guys are
[00:23:50] more welcome to check it out. It’s in the Colliers International website. And you go on, there’s a research tab that you click on research. And inside, there’s different sectors and you select
[00:24:00] whatever region that you want to invest in, for example, you want to go with Malaysia, we have Malaysian quarterly reports that shows four or five different sectors office, industrial, retail, residential,
[00:24:10] capital markets that we publish reports consistently. So anyone who’s interested in the market, make use of the resource that we produce, because we want to help clients, we want to develop client relationships to
[00:24:20] go there. But honestly, we are really personal. So if you want to reach out to me personally, add me on LinkedIn, Anthony Wong. I’ve been called Colliers
[00:24:30] International, and you can find me there or reach out to my email via email@example.com. I’m always able to help you find real estate
[00:24:40] solutions or giving you just basic guidance in terms of career path, you want to go into the real estate or real estate research.
[00:24:47] Darren Wong: [00:24:47] Yeah, obviously I’ll ensure all the links we
[00:24:50] said before, the links for different public information and obviously Colliers, for example, the information you have, the report you have and the contact information. So for the people who are
[00:25:00] interested to learn more about data centre, we are going to have a nice episode coming up within less than a week time, and then yeah, that’s it.
[00:25:07] Anthony Wong: [00:25:07] I’m looking
[00:25:10] forward to it.
[00:25:10] Darren Wong: [00:25:10] Yeah, for sure.