How the story of North Point housing estate highlights Hong Kong’s property woes
Soaring prices in North Point, a working-class neighbourhood that used to be a refugee camp and interment centre for prisoners of war, illustrates the extremes of Hong Kong’s property market
Sun Hung Kai Properties offered a studio unit in North Point last week measuring a mere 286 square feet (26 square metres) for an eye-popping HK$10.25 million (US$1.3 million), four months after a larger apartment set a price record for the east of Hong Kong Island.
The developer’s Victoria Harbour project was rebuilt from the North Point Estate, seven 11-storey blocks of public housing built in 1957 that gave lifts, private kitchens, bathrooms and balconies to residents for the first time.
Soaring home prices in North Point, a working-class neighbourhood that used to be a refugee camp and interment centre for prisoners of war, illustrates the extremes of Hong Kong’s property market. It also underscores the perennial battle between rich developers and the government over housing provision that often leaves the average buyer caught in the crossfire - and priced out of the market.
“Every time I pass by that place, I will think whether I would still be able to live there again,” said Anthony Lam, who moved out of the public housing estate in 1997 after living there for three decades.
As many as 6,250 people used to call North Point Estate home, where it enjoyed the reputation as one of Hong Kong’s best public housing areas. Conveniently located near a pier for a ferry ride across Victoria Harbour to Kowloon, it was also served by the city’s tram service and subway.
Demolition began in 2002, but a series of disputes between the government, developers and housing pressure groups meant that nothing was done with the site, and eventually the Housing Authority handed it to the government in 2007 to be put out to tender.
The site remained vacant however until 2012, when the government finally decided to sell it, having abandoned the idea of using at least some of it for public housing because of a slump in the local economy, and bowing to the wishes of developers who wanted it for private homes.
It went ahead with the tender, with Sun Hung Kai winning the right to develop the site for more than HK$6.9 billion, or about HK$9,347 per square foot of gross floor area, slightly lower than market estimates at the time.
Today, the site has become the 355-unit Victoria Harbour and a 671-room hotel called Vic on the Harbour, with views over its world-famous namesake waterway and offering a new vista in what remains a blue-collar neighbourhood.
With an average cost of about HK$20,000 per square foot including land cost, the developer could reap profits of up to HK$6 billion if all 355 units sell, according to Bocom International.
“The margin may be a record for the developer in the recent 10 years,” said Alfred Lau, a property analyst at the brokerage. The project has sold 23 units so far.
To some, it also shows how government housing policy decisions can come back to haunt, especially if they are made in the interests of developers.
“The government’s land is not being used for the general public. This allocation problem has exacerbated the land problems in the city,” said Chan Kim-ching, a researcher at Liber Research Community, a local NGO focusing on land policies. “The allocation was not done in accordance with the [general public’s] need for land.”
A Victoria Harbour unit of the same size as the one Anthony Lam used to occupy at the old estate would now set him back HK$27 million. He had paid a rent of HK$1,600 a month at the estate.
He now lives in a home he bought in 1997 through the government’s subsidised Home Ownership Scheme for HK$1.2 million. It is now worth HK$6.5 million.
Sun Hung Kai, for its part, said the prices at Victoria Harbour were “very attractive” and the development “mainly targets high-quality customers” who “pursue space and living quality”.
Victoria Harbour is not the only luxury development Sun Hung Kai has built on a former public housing site.
Across the harbour in Kowloon’s Ho Man Tin, a 2,029 sq ft flat at the company’s Ultima project, occupying the former site of the Valley Road Estate, recently changed hands for HK$102.3 million, or HK$50,417 per square foot.
Chan of Liber Research said a new approach was needed to the question of housing. He suggested the decision this week by Hong Kong’s Chief Executive Carrie Lam Cheng Yet-ngor to convert nine pieces of private housing land at the huge development project on the site of the city’s former Kai Tak airport to public housing use, was a good start.
“If the housing problem continues to worsen, the government can consider regularising the prioritisation of the use of land for public housing,” Chan said.
For former resident Anthony Lam, now 50, the former housing estate where he grew up was still a place of nostalgia.
“We used to play basketball at the court of the nearby school in the holidays, run around and play little games with neighbours,” he said. “I hope there is still public space for the people. I hope the urban area is not just for the rich.”