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What also troubles Hong Kong?

October 26, 2019

Hong Kong has been in the news of late for the ongoing civil unrest. One of the woes that unsettles many wishing to retain it as a long-term abode – is the price of property. The tall and sleek skyscrapers are not all that this erstwhile English colony is about. Hidden in pockets is the stark and growing poverty that too could be plotted on a graph like the tall towers which keep getting taller. The ‘One country, two systems’ expounded by Chairman Deng Xiao Ping and agreed to by Margaret Thatcher was certainly not about the socio-economic contrast that its population has today polarised into. 

When I first arrived to work in Hong Kong during the early 1990s, I was told how easy it was to buy a car there but very expensive to rent or acquire a parking place. I was shocked by the rentals of what were known as ‘shoe box’ apartments. Most Hong Kongers lived in them as they continue to live now, if only they can afford them. Hong Kong’s average house size is 484 square feet and considering average household size of 2.9, an average Hong Konger lives in 161 square feet.  

And an insight from Associated Press makes even this sound like a luxury. What it refers to as a dark side to the property boom in wealthy Hong Kong, where an estimated 200,000 people priced out of the market must live in ‘coffin homes’. They can be so small that a person cannot even fully stretch his or her legs! 

“A dark side to the property boom in wealthy Hong Kong, where an estimated 200,000 people priced out of the market must live in ‘coffin homes’.

The rents of commercial properties at Central in Hong Kong island then were only second to the Ginza district of Tokyo. Newspaper reports would allude to the atrocious per square inch cost of keeping a waste-paper basket in some of the top marquee buildings in the location. The wares sold from fancy designer shops – were duly marked up on account of the prohibitive rents. The prices were good enough to shock visitors from the US. On the flip side, but on a positive note were stories of aspiring migrants from the Territory trading their tiny overpriced homes for large mansions in Canada or Australia, ahead of the 1997 handover.  

Not surprisingly at the very root of the current discontent is the high cost of Hong Kong’s housing inequality. Many of those who have joined the protest movement seem to believe that democracy will address this! Ironically, not much has changed on this front since then – notwithstanding the change in the masters. Let’s unpeel further. 

Hong Kong is largely dependent on traditional industries such as finance and real estate. These two sectors account for 70 percent of the economy. Much of its manufacturing steadily started moving to Shenzhen and beyond in the Guangdong province – to leverage the labour costs which once upon a time were a tenth of Hong Kong. In just a little over two decades Shenzhen has risen from a farming community and in 2018 raced ahead of Hong Kong’s GDP. 70 percent of its economy is derived from manufacturing and technology. The rapid rise of Shenzhen too is a cause of grief in Hong Kong. The insecurity amongst the residents is bound to get further heightened with the emergence of the Greater Bay Area with Macau SAR, Zhuhai and HK SAR into its fold. 

Land sales account for 93% of the Hong Kong government’s capital revenues. It is aligned closely with the elite and vested interests – inherited from the colonial past.

Land sales account for 93% of the Hong Kong government’s capital revenues. It is aligned closely with the elite and vested interests – inherited from the colonial past. High housing prices is already causing serious limitations on the sustainability of Hong Kong’s growth. Unless the supply side is freed from clutches of the handful of builders the solution does not seem in sight. 

Talking to cabbies during travels between Hong Kong and Singapore in my time – when these city states were ferocious tiger economies – two common ‘feedbacks’ on either side were – ‘Singapore is like a hospital’ and ‘Your Hong Kong people are very rude’! Thanks to a well-managed nursing of public housing the Lion City has thwarted a housing crisis, as of now. However, Hong Kong unfortunately remains in the eye of a rude storm. 

The shifting of the airport from the Kai Tak in Kowloon to Chek Lap Kok in the Lantau island – was supposed to boost Hong Kong’s fengshui in terms of a westward property development of the Special Administrative Region.  What will eventually calm the frayed nerves of the residents – a dose of freedom alone or a nudge from the big brother to make housing more affordable and plentiful to the common man, or both? Surely some learning for a rapidly urbanising India where housing must remain affordable. 

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