A welcome 'addiction'
Long Island native Dare Koslow arrived in Hong Kong from New York, where he had lived in that city's Soho. He loved his spacious loft in one of the many converted former shophouses, buildings that once housed sweatshops and light industry.
The advertising executive was looking to recreate the kind of apartment he occupied in Manhattan. So when the board of his co-operative forced him to sell his apartment there in 2003, it gave him the impetus to recreate it here.
He used the proceeds, about US$1 million, to finance his original purchases in Hong Kong. Thanks to a quirk of timing, some good luck and a lot of redevelopment work, he's built them into the sort of portfolio which would make an aspiring property mogul proud.
'I had this available cash around [the 2003 severe acute respiratory syndrome] time in Hong Kong, so it was kind of unfortunate, but actually it was a blessing in disguise,' Koslow says. 'It was coincidentally the ideal time to buy.'
Koslow now owns 25 apartments, having bought, renovated and sold another five to finance his property portfolio. Although he has a full-time job as the regional brand marketing manager for a multinational mobile phone company, he spends much of his free time revamping and outfitting SoHo's old walk-up buildings as luxury rental units.
'It's become an addiction, actually,' says Koslow, 47. 'And at the time I started doing it, there were not that many others doing it.'
Koslow is perhaps best-known for his continuing fight with the Urban Renewal Authority (URA), which is keen to force him out of his redeveloped home on Bridges Street, opposite the old police married quarters. The URA wants to 'regenerate' the whole area.
Koslow is one of a new breed of small-scale developers who buy, renovate and then rent or re-sell apartments in old tong lau and walk-up buildings in and around Hong Kong's SoHo. There are about 10 particularly active 'redevelopers' in the field specialising in SoHo's old buildings. Their numbers were whittled down by the financial crisis, they say, when prices temporarily plunged and rents took a battering. But business is back.
Koslow often works with Australian designer Andrew Bell, a contact from his advertising days. Bell had an interest in interior design, so Koslow asked his former colleague to take a look at the floor plans and fittings at the flats he was trying to overhaul.
Bell has a knack for getting the most out of small spaces, turning what would have been a cramped 250 sqft apartment into a charming and airy space that can rent for as much as HK$25,000.
'We are very focused on our target audience, and we don't deviate at all,' Bell says. 'It's a young Western or American expat, probably earning more than they ever had before, and he wants to be in the middle of what he sees as exotic Hong Kong.'
He specialises in recapturing the period charm of the apartments by replacing features such as wrought-iron windows, common in residential units with modern replicas of what was originally used.
Bell also works with former finance executive Sean Clifford who had worked in Hong Kong after the handover, and returned from the United States for a friend's wedding in 2005. He was shocked by rents on upscale apartments in SoHo. 'It was a 25 per cent to 30 per cent return on your cash,' he recalls. 'And I started to focus on walkups with rooftops because they have an X-factor on the rent.'
Clifford began by investing HK$2 million and originally bought and sold about 10 units he thought had the potential for quick gains. He has built up a portfolio of about 30 apartments that he estimates is worth HK$300 million, and says he wishes he had never sold any of his flats, which he markets under the name Soho Lofts.
'I'm really a bootstraps small player,' he says. 'I put things on six-month completions and would sell them at the end of the completion, and then take that money and it just snowballed,' Clifford, 47, says. He now owns all of No4 Shelley Street, a walk-up next to the escalator and just off Hollywood Road, and next-door No2 Shelley Street, where he owns the apartments but not the commercial space on the ground floor. He now holds them for rentals, making as much as HK$55,000 per month for a top-floor 750 sqft apartment with roof.
Bell, 54, also redesigned the interiors of the apartments in those blocks. Clifford favours a sleeker, more modern interior, to the industrial-distressed look Koslow prefers and the more Chinese style Bell has put in the two redevelopment apartments he himself owns.
When rents took a beating during the economic downtown, Clifford cut rents on the two units that came open by 45 per cent. 'It's good to give people a good deal. They will stay longer as a tenant. You want to price yourself so you have less vacancy, and it's a win-win for everybody,' he says. Redevelopers have been able to command a lot, with a mid-size revamped apartment at about HK$36,000 compared with HK$12,000 for a similar unit in a building that's not refurbished.