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  • Apr 21, 2014
  • Updated: 4:10am
Jake's View
PUBLISHED : Sunday, 26 January, 2014, 5:00am
UPDATED : Sunday, 26 January, 2014, 5:00am

Housing Authority has no business in being a shopping mall landlord

"Let me repeat: the [housing] authority will continue to manage these commercial facilities and has no plans for further divestment."

Duncan Pescod, Director of Housing
Letters to the Editor, January 23

Note the tone of authority in this statement - "Let me repeat." It is rare these days to find a public official prepared to be quite so firm about a policy measure.

Unless, of course, he knows that his bosses are so firmly on his side that they would never rein him in. It reminds me of the old cartoon of the politician ringed by armed policemen as he says, "And I can tell you without fear of contradiction ...".

I'm sure it is true that commentator Albert Cheng King-hon had things twisted the wrong way round when claiming he had evidence that the Housing Authority will again sell off its shops as it did in the flotation of The Link Reit nine years ago.

Albert had a rumour, not evidence, and, amongst public housing boosters, rumours about the dastardly plots of The Link Reit rise to the surface faster and in greater number than fizz bubbles in a soft drink.

But, more than this, Mr Pescod knows that the bureaucracy is universally of the opinion that the privatisation of The Link Reit was a mistake and should never be repeated.

This is unfortunate. The Link Reit was not a mistake. The privatisation was exactly the right thing to do. The mistake was in how the shops were run in the years before they were privatised and there is evidence that the Housing Authority is still making this mistake.

The background is simple. With property prices tumbling at the beginning of the last decade the government decided it would no longer need to build housing for public sale. This hit the Housing Authority's finances hard. It funded construction of public rental housing from its sales programme.

As the government's overall fiscal position was also tight at the time, the authority decided to make up the shortfall by bundling the commercial areas of public housing estates into a separate real estate investment trust and floating this on the stock market. It was the authority's belief that the new investors would be passive and leave it to run the shops as before.

This proved a vain hope. The shops paid below-market rents and the opportunity was soon spotted by institutional investors. They bought up enough shares to take control of The Link Reit and then began a programme of spiffing up the shops and hiking the rents.

Let's put this into its proper perspective. In Housing Authority parlance a shopping mall is not a shopping mall. It is an ancillary services facilities block and the reality was frequently as bad as this Soviet-esque description.

The tenants of these glum, grey estate shops, handpicked by the authority, mostly sold plastic kitsch of the sort that people put on the bookshelf above the television set.

Neither the Housing Authority nor tenants had any incentive to respond to real market demand and, aside from the wet market areas, shoppers mostly abandoned the gloomy, dusty halls for high street malls.

The Link Reit changed this. It brought in new tenants, new ideas, and made shops again of what were meant to be shops, along the way raising the rents to market levels, rewarding investors who foresaw how things could be improved.

Unfair, say public housing lobbyists. The shops now sell things that people don't want at prices they cannot afford.

There is an obvious counter-argument to this. The proof of the pudding is in the eating.

If people really do not want variety and clean, bright shops, then they won't come and the shops will not be able to meet the higher rent demands.

But the opposite has proved true. The Link Reit is a proven success. People like the changes and are happy to pay the prices. The failure lies rather in the authority's remaining ancillary services facilities blocks, tarted up here and there because of The Link Reit's example but otherwise as dismal as ever.

So here is a piece of advice for you, Mr Pescod. Stop repeating and start divesting. The Housing Authority is not a competent commercial landlord.

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captam
@"The Link Reit changed this. It brought in new tenants, new ideas, ........................."
Excuse me ! You call having another Watsons and Mannings take over their local shopping centre a "new idea?
johnyuan
There are rules but hardly act upon until most recently, Hong Kong’s public housing goes about occupants way – renting them out or with property bought elsewhere. These officials are either protecting their friends or relatives who are one of those renters.
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The larger climate that is working against law and order is that Hong Kong has an insatiable appetite for a ‘taking advantage’ culture.
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Your friends would laugh at you if you don’t do it. This insufferable social pressure has weakened our sense of correctness. Not only one breaks rule but rule breaking is acceptable by society as well as to the rule compliance overseers. We don’t tell authority when our neighbors are breaking rule and we expect the same from them for us.
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The sense of correctness has no room in our daily life because any taking advantage provides protection shielding us from our friends’ ridicule.
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It is not always the money gained. It is the sense of advantage.
rpasea
@johnyuan: agree the allowance for 100% site coverage has been a disaster resulting in narrow valleys between massive blocks. I would like to see govt abandon this for redevelopment sites along with an increase in plot ratio vs greenfield sites. Older areas of HK could be redeveloped with more green space/people space. However, this strays from Jake's argument.
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The Housing Authority needs to focus on it's core mandate: providing housing for low income citizens. The key here is the definition of 'low income citizens'. If the minimum wage were at a reasonable level (try living on $30/hour) and if an annual audit was required for public housing occupants, the Housing Authority could be scaled back considerably. The economy is much different now than in the era when squatter areas were common.
johnyuan
I have no quam if what JVDK saying here is all true – improvement of the shops benefits the residence. Being an architect, I pay attention to the news about quality of our environment.
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Here, some years ago, research found that the popular design of residential towers sitting on a podium of few floors high for shops and parking, its surrounding summer temperature is 5 degrees higher. It was coined as heat island. Podium design is 100% of coverage of land that heavily relies on air conditioning since natural ventilation is not possible. That 5 degrees rise necessitate a vicious cycle which forces the residents in the tower to even more relying on air conditioning for comfort.
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The success of REIT in fact has a terrible influence. We would continue to build our housing on a podium.
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Instead, we should have a law to forbid 100% coverage of land use for any building for human activity. The North Point waterfront housing project by HA that unfortunately got demolished had a most sensible design for the residential flats as well as for the shops. They all had cross ventilation that so important and suitable for Hong Kong’s subtropical weather. The REIT for the shops still applicable.

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