Our government is aiding and abetting greedy property developers
Huge price rises for tiny shoebox flats mean Hongkongers can’t afford even the smallest home, while the big developers continue to buy up land
The greed of some property developers is truly breathtaking. At the weekend, a second batch of shoebox flats were going for an average of HK$20,797 per sq ft at Alto Residences in Tseung Kwan O, a 57 per cent rise from the first batch sold in October.
Meanwhile, Developer K Wah was also selling its latest flats at K City in Kai Tak at an average of 11 per cent more than its first batch only a month ago. Recorded sales at both sites had been poor over the weekend. A sign that the market is giving developers the middle finger? Maybe not.
Alto Residences is built jointly by Empire Group Holdings, owned by Walter Kwok Ping-sheung, formerly of Sun Hung Kai Properties, and Lai Sun Development, chaired by Peter Lam Kin-ngok. Lam is also chairman of the Hong Kong Tourism Board.
The average person in Hong Kong no longer can afford even a shoebox; an under 300 sq ft flat recently was on the market for almost HK$5 million. Wealthy Chinese tourists had been among our most reliable flat buyers. That picture has changed, though, since mainland authorities have cracked down on capital outflow in recent months.
While those developers might have miscalculated, their price hikes at the weekend had at least one eye on mainland buyers. In any case, sales may be slow, it doesn’t mean they won’t fetch ridiculous prices in the end.
It’s in the nature of capital flight that buyers would grab any non-mainland, non-yuan-denominated assets, however inflated. While mainland authorities are claiming victory amidst signs of a reverse inflow, some independent investors and analysts have expressed doubt.
Mainlanders motivated enough can always take their money out, though they are usually billionaires and companies with offshore accounts. The small fry may be the ones most affected by the latest capital control measures, introduced in January. These have had an impact on flat sales in Hong Kong.
However, Logan Property Holdings of Shenzhen and Guangzhou-based KWG Property Holding last month paid 50 per cent above market valuation for a plot in Ap Lei Chau.
More mainland developers are expected to bid aggressively for another residential plot in old Kai Tak.
So while the small fry is being deterred, the mainland big boys continue their buying binge, and our government, through sales of high-value land, is aiding and abetting them.