Another metric for housing value in HK

There is a fixation on the location of property in Hong Kong. However, I think the focus should be on travel time because basically it is the opportunity cost of time that is paramount. Reduction in travel time should mean an increase in leisure time.

Time = distance / speed.

Even though the distance may be greater, as long as the speed is faster, there is no change in time. Faster speed may be attributed to less traffic congestion, less traffic lights, less stops along a train line, etc. Due to the efficient public transport/general transport infrastructure in Hong Kong, speed is generally faster than in other countries.

A value metric for property based on travel time is proposed.

Price (purchase price or rent) is usually a function of convenience and also property size. One factor when determining convenience is the travel time to reach to Central, which is where most office jobs are located.

Raw distances
19.9kms - Seasons Monarch -> Prince's Building

3.9kms - Park Avenue -> Prince's Building

1km - Valiant Park -> Prince's Building

Via MTR from Seasons Monarch
Kam Sheung Rd MTR -> East TST MTR -> TST MTR -> Central MTR
27 minutes + 4 minutes (walking time) = 31 minutes
$4.9 + $15.9 = $20.80 fare

Door to door is 45 minutes
leave Seasons Monarch at 8:45am, arrive in office at 9:30am.

Kam Sheung Rd MTR -> Nam Cheong MTR -> Hong Kong MTR -> Central MTR
15 minutes + 12 minutes (3 minutes walking time at Nam Cheong and 9 minutes from Hong Kong MTR to Central MTR) = 27 minutes


Via Bus from Seasons Monarch
Tai Lam Bus Interchange -> ICC at Kowloon MTR via KMB bus no. 968, 969, 969P
20 minutes

Tai Lam Bus Interchange -> Central via KMB bus no. 968, 969, 969P
40 minutes


Via MTR from Park Avenue
Olympic MTR -> Hong Kong MTR -> Central MTR
7 minutes + 8 minutes (walking time from Hong Kong MTR to Central MTR) = 15 minutes


Seasons Monarch
$7,753,340 - Purchase Price/Cost Base on 13 October 2009
2,837 square feet. 1,322 square feet internal (usable). 46.59% efficiency. Excluding roof, driveway & backyard.

$2,732.94 price per square foot
$2,732.94 X 32 minutes = $87,453.96 to Central

$5,864.85 price per internal square foot
$5,864.85 X 32 minutes = $187,675.20 to Central

Park Avenue
$8,000,000 - Purchase Price on 27 May 2008. 8.8% compound annual growth rate.
$4,343,000 - Purchase Price on 1 March 2001
982 square feet. 743 square feet internal (usable). 75.66% efficiency.

$8,146.64 price per square foot
$8,146.64 X 15 minutes = $122,199.6 to Central

$10,767.16 price per internal square foot
$10,767.16 X 15 minutes = $161,507.4 to Central

Considering time to travel to Central with the price per square foot, Seasons Monarch is 28.4% cheaper than Park Avenue.

Considering time to travel to Central with the price per internal square foot, Park Avenue is 13.9% cheaper than Seasons Monarch.

Note 1: We are not including the benefit of a driveway at Seasons Monarch. A car park at Park Avenue is about $2,000 - $3,000 per month. To buy a car park is approximately $320,000. To make a fair comparison, then the $320,000 should be added to $8,000,000. The price per square foot for Park Avenue becomes $8,472.51. Therefore considering time to travel to Central with the price per square foot, Seasons Monarch is 31.2% cheaper than Park Avenue.

Note 2: We are not including the travel time door to door. It takes 5 minutes using the shuttle bus from Seasons Monarch to reach Kam Sheung Rd MTR station and 10 minutes to reach the Tai Lam Bus Interchange. However, it also takes 5 minutes walking time from Park Avenue to Olympic MTR station.

Owning in Seasons Monarch versus Renting in Park Avenue
$9,886.53 - monthly cash expense at Seasons Monarch (interest, management fee, rates, insurance) for 2,837 square feet
versus
$25,000 - monthly rent at Park Avenue for 982 square feet, in Tower 9, upper floor.

Assumptions:
If you live in the same location, but pay lower cost, then this is better.
If you live further away and pay a higher cost, then this is worse.
If you live closer and pay a higher cost or live further away and pay a lower cost, then we need to calculate whether it is better value or not.

Seasons Monarch - 32 minutes X $9,886.53 = 316,368.96
Park Avenue - 15 minutes X $25,000 = 375,000
Sorrento - 13 minutes X $26,000 = 338,000
Mei Foo Sun Chuen - 21 minutes X $16,000 = 336,000

The lowest value above indicates best value for money in terms of travel time to Central.