Hong Kong, a city (pardon me, Special Administration Region) of 1,104 square kilometer but with a population of over 7 million, has long been considered as a place where every inch of land is in extreme scarcity. In other words, it wouldn’t be outrageous if others think that people in Hong Kong live in a cage as the houses are so small, but then it’s also so easy to fly away as the flight routes to other cities around the world are abundant. Despite the currently ridiculous population density of 6,540 persons per square kilometer (the highest, 54,530, is the Kwun Tong district), space in Hong Kong seem to become even more sought-after and expensive. The reasons are obvious but worth repeating:
Influx of expatriates and immigrants
There seem to be more and more people coming to Hong Kong for both travel and work. As the city of “Asia’s Financial Hub” (or “Asia’s World City”, according to the government), opportunities in banking, finance, retail and the logistics sectors are numerous. The ease of business entry and simple tax system also attract many foreign investments and new ventures, thus luring people around the world to come to Hong Kong for work and for immigration. The influx of expatriates and overseas immigrants only further leads to the surging housing demand and smaller space shared by an individual citizen. Plus these of newcomers usually earn a higher income than their local counterparts, therefore they can afford to take up houses with bigger space in premium areas, thus spurring rises in rents and housing prices.
If you’re amazed by the Mainland Chinese tourists’ splurging on luxury goods on luxury retails store on Canton Road, you should perhaps feel the same for the Hong Kong property developers who put great efforts in attracting premium international retail shops to set foot in their prime shopping malls. The foray of international clothing and leather goods brands has forced many local and mid-range brands away from the shopping malls in main business districts where rents only get higher and leasing terms only get harsher. New lands are being developed into shopping districts while office space for these new invaders are becoming hard to find. For those small or individual-run brands who want to establish a presence in the land of gold (a.k.a. Hong Kong), some residential buildings in sub-business districts like Sheung Wan are being converted into studios, showrooms and even offices.
“Look at my pretty, empty house!”
Don’t forget that the nouveau riche from China are not only interested in buying luxury consumer goods, but also fixed intangible assets like property. Many newly developed residential buildings in Hong Kong, especially those in premium areas like Mid-Levels, Pokfulam and Kowloon Tong, are quickly taken up by those Chinese. They could buy multiple houses as an investment while leaving them empty, wanting to sell them when the prices go up. In this case, those new houses are built for the demands from the people who plan to buy them (but not live in them) and then to sell them, rather than for the people who actually want to space to live.
Are we going forward… or backward?
We have so many things coming to our lives: new (or old and famous) international brands ready for us to shop, new and fancy offices, and new and expensive houses that are left empty for resale.
Do we have so much to buy? It’s true that the tourists from Mainland and overseas really love the malls in Hong Kong because of the absent sales taxes, but now they all seem to go to Europe and US as the prices for luxury goods are even lower. Those retail shops on Russell Street paying extreme high rents are already suffering from the decreasing traffic from tourists. I’m sure everyone loves or doesn’t hate shopping, but if the meaning of life is to earn enough to spin it off, it’s quite pathetic.
For the new offices of the brands that set foot in Hong Kong, their presence has already crowned the city as having the world’s highest class A office rents (it costs $249 per square foot to rent office space in Hong Kong’s central business district, according to CBRE). Many foreign consulates are forced out of the core district (Central) and relocated to sub-central districts like Wan Chai, North Point or Quarry Bay (source). such as the Consulate of Sweden, the Romania consulate and the Canadian consulate. Some art galleries are also moving to Sheung or Wong Chuk Hang to skirt the high rents in Central. Consulates and art galleries are a part of a city’s art, culture and heritage. Their being forced away by economic cruelty only deteriorate Hong Kong’s notorious label as a “cultural desert”. Period.
And the new empty houses that sit beautifully in the premium areas? Some of their owners who are overseas investors are not going to move in, or if their owners do come to Hong Kong to settle down and live in those houses, it would again bring up the problems we discussed in the beginning, population influx. The more space the rich take up, the less can be left to the rest of the citizens. Those who live under the poverty lines are only staying in at houses with no more than 100 square foot. Elderly people would have to continue to share their bunk bed with another flatmate and find little space for themselves to even turn when they’re sleeping.
If the over-heating property market goes on endlessly, may we all carry our designer purse and smooch some rare vintage champagne at a roomy house while laughing at the rest who are thinking that they live in the part of Hong Kong that is like Shenzhen 20 years ago.
Image source: Master Travel Photo