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Letters | Why should low-income Hong Kong residents have to pay for speculators’ business mistakes?

  • Link Reit’s reputation for selling poorly performing properties should have warned off potential investors. When these companies try to recoup their investment, low-income residents pay the price

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Kai Yip Commercial Centre in Kwai Shing East, among the 17 properties that Link Reit sold to a consortium led by private equity fund Gaw Capital Partners in November 2017. Photo: Sam Tsang

On April 1, the Housing Panel of the Legislative Council held a four-hour public hearing to examine the social problems caused by Link Reit’s sale of 57 commercial properties in public and subsidised housing estates to various new owners.

The complaints lodged by the residents and shopkeepers affected are too numerous to summarise in this letter. Suffice it to note that one of the new owners, Ace Ample Hong Kong Limited, made a written submission to the panel complaining about the difficulty it had encountered in boosting visitor traffic at Hing Man Estate in Chai Wan because of “smearing” by a local residents’ concern group and unfair finger-pointing by politicians. Ace Ample threatened to take legal action against its critics.

Such companies have themselves to blame for buying public housing properties from Link Reit at market top. Link Reit has a reputation for remodelling only commercial properties in good locations, which it could turn into a regional or even citywide shopping hub, and selling poorly located ones. Its shabby management of ageing commercial properties in public housing estates in poor locations, such as Sun Tin Wai and Hin Keng in Sha Tin, Ming Tak in Tseung Kwan O and Tin Ma Court in Wong Tai Sin, is well known.

The consortium led by Gaw Capital Partners made a similar mistake by paying too much for the shopping facilities at On Ting and Yau Oi Estates in Tuen Mun. At a price tag of over HK$5 billion and a premium of 70 per cent above market valuation, the rate of return on the investment was estimated to be about 2.8 per cent, not much better than that of 10-year US Treasuries in late 2017.
Members of the Link Watch concern group urge the government to buy back the Link Reit’s properties, during the company’s annual general meeting in Tsim Sha Tsui in July 2018. Photo: K.Y. Cheng
Members of the Link Watch concern group urge the government to buy back the Link Reit’s properties, during the company’s annual general meeting in Tsim Sha Tsui in July 2018. Photo: K.Y. Cheng

To recoup their investments, these investors had to further drive up rentals. The problem of vacancy because of the high rent levels is a problem of their own making.

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