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Alex Frew Mcmillan

The price of one kind of property continues to see massive escalation this year - the Discovery Bay golf cart. The latest transactions for the highly prized and highly restricted vehicles broke the HK$2 million mark.
'You can pick up a studio apartment here for around HK$2 million,' said Brian King, the principal of property brokerage Headland Homes.  
'So how ridiculous is that? Your golf cart may cost more than your apartment.'
The surge in demand for the carts pushed their value above what you would expect to pay for many luxury cars. Carts that were that were selling for HK$1.5 million at the start of the year are now HK$2.2 million. 
The doubling of price in two years has more than matched events in the property market. 
'It's a ridiculous amount of money, I know,' admitted an airline pilot who bought a cart in June for HK$2 million. He did not want his name to be used because he is embarrassed about how much he spent. 
'But, I said, I have the cash. I can put it back into property, but the market is berserk. Sitting in the bank it's doing nothing. So I thought, why not? It's not a bad return.'
The carts rent for HK$8,000 to HK$9,000 a month, meaning that even at their current high prices they can generate a yield of around 5 per cent - better than most property purchases in Hong Kong. 
Cashing in on resales of carts has also become a popular transaction - the cart that the pilot bought cost only HK$1.5 million when the seller, another pilot at Cathay Pacific, bought it at the start of the year. 
The Hong Kong Transport Department has capped the number of golf carts in Discovery Bay at 490. The number of cart permits has not changed significantly since the area was first developed in the 1980s, because the department was concerned the carts would overcrowd a road system that sees frequent bus traffic and the occasional delivery van. Hire cars are available in Discovery Bay,  but residents complain of a half-hour wait at best to book the service, and believe the golf carts offer greater flexibility. This is causing the squeeze on prices.
'The market is very, very small,' said Dick Hung Koon-fai, who runs DB Golf Carts, one of the two servicing centres for the carts. 'Nobody is selling one now. I think we're waiting for HK$2.5 million.'
Hung said during school term time, there was a traffic jam of around 200 golf carts outside Discovery Bay International School and Discovery College. 'In DB, all the women want to take their children to school,' he said. 'All the families need a golf cart to rent.'
Anyone looking to buy a cart must own a property in Discovery Bay, but as long as they can find someone willing to trade the licence to them, they can switch the registration of the vehicle into their name.
That is the challenge. Prospective buyers sometimes have advertisements listed on the online Discovery Bay Forum or in the local grocery store for three or four months without getting much of a response. The few carts that do come up for sale often move quickly - and attempts at negotiating on the price are met with stony silence.
The carts are technically village vehicles, licensed under the Village Vehicle Permit system, like the work carts and trolleys used in car-free islands such as Cheung Chau and Lamma. But the annual permit cost is negligible, at HK$97. 
The other annual costs are also small. Drivers must get third-party insurance, which costs HK$850 for personal use or HK$1,150 for a cart that is rented out. And they must pay HK$1,100 per year towards a road fund run by Discovery Bay City Management. 
The price to buy a cart is far above its intrinsic value - it costs around HK$85,000 to HK$90,000 to replace an old cart, depending on the model.
'It's the licence plate you are buying,' King said. 'The vehicle is almost incidental.'
Well, not quite. The newest models are electric-powered, some with solar panels on their roofs to keep them charged, a much quieter and eco-friendly version than the old gasoline-powered models.
'If you've got the new Yamaha, you've got the Rolls Royce,' said Christine King, the director of Headland Homes, and Brian King's wife. The E-Z-GOs  are the next-most  popular, with the Columbia Par Car  one rung further down. 
Some of the Par Cars are the original models from the 1980s, and are still running on the roads. 'They're a lot more stable, and can go pretty fast,' King said. 
She recalls buying her first cart for HK$37,000 in 1987. She has since built up a stable of five, which she uses for work, or to rent out with specific properties. But the sudden escalation in prices has been shocking, she said, with carts selling for HK$1 million 18 months ago.
'How to make a cool million on a golf cart in a year,' she joked. 'I'm quite happy.'
Property brokers in particular find the carts essential if they are going to take residents around the increasingly sprawling development. Some landlords consider the golf carts an investment, and lease them along with apartments they have for rent to make a more attractive package.
Hong Kong Resorts requested the government relax the number of licences in Discovery Bay. Brokers estimate there are now about 23,000 residents, after the addition of projects such as Siena One and Two, completed in 2003, and the Chianti, unveiled in 2007.
The 850 units of the Amalfi, a new development next to the Chianti, will likely see another influx of a couple of thousand residents moving into Discovery Bay. That is slated to go on the market at the end of this year or early next year, brokers say, though the timing has yet to be confirmed. 
Residents now expect a dip in demand for golf carts as the property market cools. But the price for the carts is likely to remain high as long as there is no change in government policy.
'There are no more golf carts, so as long as they keep putting more and more people here the price is not likely to change,' Brian King said. 'It's simply supply and demand.'
Residents are not allowed to decorate their carts, which must remain white - although the occasional zebra-striped cart is spotted, particularly around Halloween. But they are still a significant status symbol.
'It's become like a good golf cart is like driving a Maserati or a Porsche,' said Katie Jepson, another Discovery Bay property broker. 'Crazy. Only in Hong Kong.'



Golf carts roll past HK$2 million