Companies among the owners of fatal blaze flats
Ten of the flats in buildings affected by yesterday's fatal fire in Mong Kok are owned by companies or investors, drawn to the lucrative rents offered by older buildings.
Land registry data revealed that 10 of the 48 units in the six buildings in Fa Yuen Street are held by private companies while an individual owner, Wan Chi-fong, owns two flats in the building at 192 Fa Yuen Street.
According to the Companies Registry's database, two flats at 190 and 198 Fa Yuen Street belong to Farene Industries.
The company is owned by Chan Bik-ha and Chan Pik-sim, daughters of the late Chan Kwai-hung, a well-known property investor.
The late billionaire was the chairman of Kwai Hung Realty. Originally a vegetable seller, in the 1980s he began making money from buying old properties and reselling them to property companies seeking to redevelop the buildings.
He was kidnapped in 1999 and released after a HK$30 million ransom was paid. He died later that year and left his family more than 100 old flats in areas such as Wing Lee Street in Sheung Wan and Shanghai Street in Mong Kok. His children once told the media that the family had so many flats the exact number was unknown.
The average age of the buildings affected by the fire is 52 years.
'The property prices and upside potential of such old flats are low, but they are attractive to investors looking for a high rental yield and long-term investment,' said Sammy Po Siu-ming, a director at Midland Realty. 'The buildings are in urban areas and accessible. It helps the flats attract higher rents.'
Society for Community Organisation organiser Sze Lai-shan said rents in subdivided flats were on the rise.
'A year ago, the monthly rent of a 60 square foot cubicle in Mong Kok was HK$2,200. But the rent has climbed to HK$2,900 a month now.'
This translates into a monthly rent of HK$48 per square foot - double that of private residential estates in Kowloon.
Owners of flats at Central Park next to Olympic Station are asking HK$23 to HK$31 per square foot a month, according to Centaline Property Agency.
The rent for a typical 643 sqft unit with two bedrooms is HK$16,000 a month, or HK$25 per square foot.
'The rental yields of subdivided flats are more than 10 per cent. If the vendor leased a whole flat to a single tenant, the investment return is only about 8 per cent,' Po said.
Monthly rents for cubicles in the urban area could reach HK$4,000.
'The demand for subdivided flats is strong. If you divided a 800 sqft apartment in the urban area into four or five flats, that will bring a total monthly rental income of HK$20,000. However, it would be difficult for an investor to find a single tenant willing to rent a flat of that size for that much. The buildings are too old,' he said.
Sze said the monthly rents of subdivided flats began to rise significantly in 2008.
'We believe it was mainly because of the increasing inflation rate and because developers are active in redeveloping old buildings. And then there is increasing demand from mainland individual travellers,' she said.
Typical rent, in HK dollars, for subdivided cubicles in older buildings in Mong Kok
- Rent is up from HK$2,200 a year ago