Ordinary Gweilo

At the start of the year, I mentioned the curious business of the housing estate in Hung Hom that the government built and then decided it didn’t want any more.  At the time, the developers who kindly took this so-called white elephant off the government’s hands said that they would probably knock it all down and turn it into a park put up some rather swankier apartments instead. 

Now the developers have confirmed that is exactly what they plan to do.  Cue predictable outrage from environmentalists and people who think that the property companies are profiteering.  In Hong Kong, as well, where that type of stuff almost never happens. 

Simon is upset as well, mainly at the fact that the shareholders of SHKP and NWD are profiting at the expense of everyone else in Hong Kong.  Nothing new there, though.  Property companies have become rich by virtue of being able to acquire sites as cheaply as possible and negotiate the lowest possible land premium, then sell the completed apartments for the highest possible price.

Many years there was a big fuss in the UK because a property company built an office block (Centre Point) and deliberately kept it empty:

Centre Point became notorious because it remained empty for years. The economics of this was that, as rents were rising so sharply, it was better to leave it empty than rent it out and tie its value down to a particular rent review period. This was because the capital appreciation was greater than the lost rental income. It’s construction cost in 1964 was £5.5 million whilst its estimated market value in 1973 was £20 million. The icing on the cake was that as it was empty it was not liable for rates [a form of property tax that applies in the UK (and Hong Kong)].

Property companies frequently knock down perfectly good buildings in order to put up something new in their place, and in Hong Kong it is common for buildings that are only 20-30 years old to be demolished.  However, this is a particularly extreme example, and amazingly it even seems to have provoked criticism from the government – the Secretary for the Environment, Transport and Works, Sarah Liao, said today that the developer’s decision is not environmentally friendly.  I think I must have been living in Hong Kong for too long, because somehow I can’t seem to get upset about this.

Only in Hong Kong.