Lamma Island

Long-time Lamma residents feel pinch of rising rents

Long-time residents say an influx of professionals used to high rents is prompting landlords to up their stakes

PUBLISHED : Monday, 22 April, 2013, 12:00am
UPDATED : Monday, 22 April, 2013, 6:07am

Boxes surround Karen Carmen in her Sha Po village flat on Lamma Island. Faced with a rent increase from HK$18,000 to HK$23,000 a month, she has had to search for a new home. However, when she started scouting around at the property agencies, she was shocked by the prices.

"I found a place in a village I used to live in and less than two years ago, rent for a 700 sq ft apartment with a rooftop was HK$6,500 and now it asks HK$12,000. It's doubled in such a short amount of time," says Carmen.

Hayri Ozen has a similar tale of rent woes. He has been a Lamma resident for eight years and was running a kebab store off the main street of Yung Shue Wan, Lamma's main community. The rent for his 700 sq ft place rose from HK$4,000 to HK$12,000 over six years.

To solve the pressure of moving every two years when each lease ended, he bought a home but that did not make him completely immune. "Two weeks ago, my landlord increased the rent on my business by 100 per cent," Ozen says. "They don't care that I've been a good tenant for years."

Lamma Island, long a sanctuary from high-cost Hong Kong, is undergoing a radical rent rise. While most of the evidence is anecdotal and it is difficult to pinpoint hard data on the trend, residents describe a doubling of rent over the past four years. In the same timeframe, rents on private residences rose about 60 per cent in all of Hong Kong, according to the Rating and Valuation Department.

The rise is squeezing residents. "The people on Lamma are middle-class folk. We're not the overpaid bankers that can afford crazy rent [rises]," says Josh Sellers, a designer and branding consultant who has lived the past eight years on Lamma.

There are different theories on why Lamma is experiencing above-average rent rises.

The moderator of community website who goes by the moniker of Lamma-Gung, says Lamma has been attracting higher-paid professionals from Hong Kong Island. The incoming residents are used to Hong Kong Island rents and are prepared to pay a lot more to live on Lamma, so the theory goes.

"People who cannot afford Hong Kong Island are driven out, so they're coming in here. They're used to even higher rents - HK$30,000 or HK$40,000 in Mid-Levels - so they think HK$20,000 is such a good deal. The property agents are all hooray, hooray! when local tenants have only been paying HK$10,000 to HK$15,000."

Lamma gentrification is nothing new. It has been going on since 1997, ever since British backpackers stopped getting automatic visas to work in Hong Kong.

What is new is Hong Kong's post-2008 financial services bust, combined with a low-interest-rate fuelled property bubble. This has squeezed a certain class of expatriate tenant off Hong Kong Island, and on to Lamma.

You could imagine the scenario. Someone working in financial services loses his job in 2008-09. Meanwhile, his Mid-Levels flat goes up in rent, as Hong Kong property prices have hit record levels. So he moves to Lamma, easily cutting his rent in half.

"After the [2008] crash, quite a few guys came over from Mid-Levels and said, 'What can I get for HK$25,000?' It was an exodus of sorts," says Nick Berriff, a Lamma-based designer.

Berriff owns his flat in Tai Yuen village and says the value of his property has tripled in the past decade, "with most of the leap in the past five years".

Also, as the type of expatriate resident on Lamma has become more professional, family-orientated and settled over the years, there has been an increased tendency for expatriates to buy their flats on this island, crimping supply for renters.

Jackson Ng Wah-fai, a property agent who owns many properties on Lamma, says he noticed more expatriates are choosing to buy their flats on the island, and then to buy a second or third property as an investment. "It's a Chinese idea that's caught on with foreigners," he says.

Lamma has also seen a gradual upgrading of its ferry service - the October 2012 ferry disaster that claimed 39 lives notwithstanding.

Over the years the commute to Central has been cut from about 40 minutes to 25 minutes. Last year, the ferry operator added a late-night (2.30am) service from Central to Lamma on weekends. The extra ferry addressed a longstanding gripe that Lamma residents could not go out on Friday or Saturday night without missing the last ferry back to Lamma, which for decades left at 12.30am.

All of this has plausibly added to the demand for Lamma flats.

Carmen says people have dealt with the high rents in different ways. Many are simply moving to less popular villages that are further from the ferry pier or, perhaps, involving a 20-minute walk up a steep hill. Others have looked for smaller places or found a roommate.

"What I am noticing is a lot more people are renting 350 sq ft apartments instead of 700 sq ft or people who have been living by themselves for years - people in their late 30s or early 40s, working professionals - who now have roommates," says Carmen.

Sellers is one of those. To keep pace with rent increases, he now lives with a roommate, each paying about HK$9,000 per month for a 700 sq ft flat.

Sellers thinks that Lamma, much like the rest of Hong Kong - is overpriced.

"The flats are not worth it at all," he said. "I've lived in San Francisco and New York. The rents are maybe about the same as what I pay in Lamma, but Lamma is not New York. There's no music scene. There is barely an arts scene in Hong Kong.

"Unlike the city, we've got huge poisonous snakes all over the place, a massive amount of mosquitoes and huge centipedes. My old place literally had a jungle in the backyard with pythons. There's not a variety of restaurants. There's no access to shopping."

Lamma residents may complain but they are unlikely to move. People who live there see the island's main drawback - the commute by ferry into Central - as a positive - it buffers them from polluted, high-density Hong Kong.

Residents covet the island's greenery, the absence of cars, the access to beaches and hiking trails, the vibrant local community, and the fact that no building is higher than three-storeys, among many positives.

Charlotte Douglas, a homeopath, moved to Lamma two years ago from Hong Kong Island, cutting her rent in half.

She appreciates Lamma's greenery and small-town vibe. "We have a beautiful garden, lots of space … it's still good value," says Douglas.

Indeed, Lamma residents have always felt that Hong Kong islanders were missing a trick - that, in any other big city, a leafy suburb a short commute to the central business district would command a premium.

"More and more people have come over and discovered the secret of Lamma, which is that it's a nice, middle-class place to live," says Berriff. "If it were any other place in world, I would not be able to afford it, because it would be full of millionaires."