Chance to escape from rat race

Long an enclave for writers, artisans and those who like to think they are, Pok Liu Chau - or Lamma as it's better known - is joining the property game in its own special way. Lamma provides a relaxed alternative to the rat race of downtown and property prices and rents are noticeably lower than in Kowloon or Hong Kong. However, prices have risen in recent years and have not been affected much by the recession. Buildings taller than three storeys and cars are prohibited, with the exception of small fire trucks and ambulances. Most of the population of 6,000 get around Hong Kong's third largest island by foot or bike. Its greenery, forests, beaches and miles of scenic hikes, coupled with scores of local and international restaurants attract visitors and house hunters wanting a break from the city. The island's most interesting new development is the Lamma-1 project, according to Paul Lam, general manager of King Wong Development. It comprises 11 townhouses in Nga Kau Wan to be completed later this year. Also of note are recreation and dining facilities at Sok Ku Wan, and the Marina Club and Spa resort hotel in Tung O. Victor Lau, of Fok Ming Estate Agency, believes Lamma is a splendid place to live and affords its residents 'a chance to escape from the busy and demanding life of Hong Kong' and is a 'dream holiday home for many'. Lau also contends Lamma offers 'a very good investment opportunity' with average annual returns this past decade running at 5 per cent or more. However, Teddy Lam of HKRealty.com.hk believes that purchases in cheaper spots get relatively higher returns than investing in prime locations; the former have lower capital appreciation, but the percentage gains are higher. 'The average market return ... for most of [Lamma's] prestigious areas might be around 2 per cent [annually], so I guess the returns there [at the low- to medium-end] might be 4 per cent,' Teddy Lam says. Likewise, Paul Lam and eight-year Lamma resident Hermann Ruegg agree that sales and rental prices have been stable for the past eight years. Ruegg, better known as Web marketer Lamma-Gung, operates Lamma.com.hk. He says the island is not just an investment to him and it strikes a visceral chord when people describe it as such. 'Investment is very rarely an important reason to buy a Lamma property. It's usually people who love the place, the community feel, the green and the untouched environment outside the villages'. Ruegg says the island is 'a great place for bringing up children, having pets, and for retired people and professionals working in town'. According to Teddy Lam, 'Lamma used to be a cheap place to live', but recent price increases have changed the view that one can live there on meagre means. Though cheaper than the rest of Hong Kong, he doesn't think Lamma properties are a good investment because 'few buyers are interested in it', thus the lack of a secondary market. 'Another consideration is that when you want to cash out, the liquidity is low, especially when the market is depressed,' he says. Lau says more foreigners have chosen to buy property on the island in recent years as a holiday home or long-term investment. 'Expatriates and locals buy flats here to live in them full-time or at least at the weekend,' says Ruegg, who adds it's sometimes tough to get a mortgage as few banks will lend for Lamma purchases. Even with the lower than normal prices, 'a mortgage would usually cover less than half of the actual sales price,' he says. Vivien Jones, a 17-year Lamma resident, agrees. 'Some banks won't give mortgages on village houses and if they do, the valuations do not reflect the market price and the bank will only offer 70 per cent on the valuation. It can prove difficult for some people to find financing,' she says. As for location and type, the rarest are individual houses and high-rise residential building, with balconies and ocean views. Owing to limited supply, their values held steady during the financial tsunami, and have even seen appreciation. At present, only standard-sized, single village houses, ranging from 350-650 sqft, are being built for rent or sale. Jones lives on Lamma with her husband and two children in their 1,400 sqft house worth HK$6.5 million in Po Wah Yuen. 'It's probably the most desirable location in Yung Shue Wan; close to the village and the ferry [two to three minutes away], and private with a good sea view. This is where the majority of large [and] desirable houses are located,' she says. Her home has a 700 sqft roof terrace and an 800 sqft private garden with fruit trees. 'Anything not more than five minutes from the Yung Shue Wan ferry pier or recently renovated and fully furnished is desirable.' 'Village Houses built in the last few years, especially the very rare ones with high ceilings on the second floor', are all sought after, Ruegg says. Two-storey flats usually include a rooftop of the same area as the entire flat. According to Lau, five years ago, the average price on Lamma was about HK$2,200 to HK$2,500 per square foot. 'There was very minimal effect towards prices due to the recent financial crises, as most of the properties were for residential use.' A typical 700 sqft flat will sell for HK$2 million, according to the latest advertisements on estate agents' windows. 'Property prices on Hong Kong Island are affected by investment appetite and speculator and opportunist activities,' Paul Lam says. 'These factors are not applicable for the properties in Lamma.' That may well be welcomed by those who want Lamma to retain its unique identity.