Homeowners ground down by real estate rush
There goes the neighbourhood. The government's new policy on compulsory sales in old buildings has set off a property gold rush in Hong Kong's older districts.
The resulting upheaval has put homeowners on guard and raised fears about the destruction of long-established communities.
Before April, acquisition companies working for developers had to buy 90 per cent of a building's units before they could force the remaining owners to sell. The government has lowered that threshold to 80 per cent for buildings more than 50 years old.
The impact can be felt in places like Ho Man Tin, where up to 20 buildings in a few blocks east of the MTR's East Rail line are targeted for redevelopment. About half are being acquired by Richfield Realty, a company whose controversial acquisition methods include the hanging of large red banners over targeted buildings, a tactic that many homeowners say creates an atmosphere of intimidation.
'We're very angry and upset to see those banners all over the place - it's like a cancer that's spreading throughout the city,' Kobe Ho, a bookstore manager who lives on Waterloo Road, said.
Wong Ho-yin, a member of the Minority Owners Alliance Against Compulsory Sales, which works with homeowners who do not want to move, said the new legislation had really sped up the process of urban renewal in Hong Kong. 'Urban renewal has so many negative effects ... It's bad enough with the Urban Renewal Authority, but when the private sector gets involved, things are even worse,' Wong said.
Richfield has been accused of misleading homeowners into signing contracts that allow the company to hold on to flats for years before completing the transaction, without additional compensation. In August, the Estate Agents Authority warned acquisition companies against such practices, and Richfield insisted that it operates within the authority's guidelines.
But the conflict over redevelopment is set to grow as ever bigger buildings are targeted. Until now, most of the buildings acquired for redevelopment have been walkup tong lau with few owners, but Dr Lee Ho-yin, director of the University of Hong Kong's architectural conservation programme, said much larger buildings would be next as more 1960s-era blocks reached the half-century mark.
In Ho Man Tin, Richfield has already started buying units in the 47-year-old Shing Tak Mansion, on Peace Avenue, which has 175 units.
Li Ling-hin, an associate professor in the university's real estate and construction department, said: 'In general and in a fair market environment, [the new compulsory sales threshold] is a good thing.'
But the market is not always fair. 'It is not a good sign that all redevelopment projects these days are packaged as luxury housing projects,' he said, because it resulted in inexpensive older flats being replaced with pricier ones that appealed mainly to investors.
There is also the issue of the acquisition process itself.
'The whole process lacks transparency and regulation,' Wong said. 'Because the whole process of acquisition is so long, it creates a lot of uncertainly and pressure for residents to sell, not to mention a very unpleasant living environment.'
Wong said that even if most residents wanted to stay put, acquisition companies eventually wore them down.
'Once the banners go up, people get scared,' Susanna Poon, a property broker on Peace Avenue, said.
Concerns about the structural integrity of old buildings also play into the pressure to sell. After January's fatal building collapse in Hung Hom, Richfield began displaying photos of cracked concrete in some of its shopfront acquisition offices.
Earlier this year, several Tai Kok Tsui residents said they received an anonymous letter warning that their building could collapse as a result of tunneling work for the Hong Kong-Guangdong express rail line. A few days later, Richfield approached them with an offer to buy their flats.
Many of the problems are cosmetic rather than structural. When the government conducted a survey of 2,933 buildings after the Hung Hom collapse, it found more than three-quarters needed no repairs.
Earlier this year, less than six months after their building was renovated under the government's Building Bright scheme, many owners of flats in Matauwei Apartments in Hung Hom sold to Richfield. Some cited concerns about a possible collapse as their reason for selling.
Wong said that the acquisition process might have contributed to the decay of old buildings. When acquisition companies buy a flat, they often open all the windows, leading to rain damage. As more flats are acquired, the building's owners' corporation collapses, resulting in cutbacks on maintenance.
Even more worryingly, many homeowners complain that their buildings are subject to mysterious acts of vandalism after acquisition companies move in. 'It can't be a coincidence, but it's very difficult to prove that an acquisition company is responsible,' he said.
When homeowners do sell their properties, they often find that their compensation is not enough to buy another flat in the same neighbourhood. That's especially true in Ho Man Tin, where property brokers say that the acquisition drive is pushing up prices.
A sign of the future could be One Victory, a new residential tower being built on Victory Avenue. It recently went on the market at HK$10,000 per square foot. According to Wong, most homeowners whose properties are being acquired by Richfield are being paid less than HK$7,000 per square foot.
Until now, Ho Man Tin has been an exceptionally stable neighbourhood, with 72 per cent of residents living at the same address as five years ago, compared to 58 per cent in the city as a whole.
'If everything is replaced by buildings like One Victory, the community will be destroyed,' Kobe Ho said. 'People are being thrown out. You will no longer see any more small businesses.'
Half a dozen businesses on Victory Avenue have closed since April. The next to go might be Kei Heung Bing Sutt, a popular gathering spot that has served milk tea and macaroni soup for 38 years.
Richfield has bought more than 80 per cent of the units in its 52-year-old building.
'I've seen my customers grow up and come back with their own children,' the cafe's owner, Kwan Kin-ming, said. 'If they want to demolish this building, we might have to leave very soon. What can I do?'
In Ho Man Tin, 72 per cent of residents have lived at the same address for five years, compared to the city average of: 58%