Tiniest Subsidised Flats for Sale

The subsidised flats occupy the former airport at Kai Tak

The Hong Kong Housing Authority's mandate is to provide affordable rental housing to low-income families with housing needs, and to help low- to middle-income families gain access to subsidised home ownership.

That's what it says in its website.

However next year's batch of subsidised homes the authority will sell will be as small as 186 square feet -- the equivalent of one and a half car parking spaces, the tiniest flats to be offered since the start of the Home Ownership Scheme in 1978.

The smallest flats will be 186 sq ft

The 320 small units are on the site of the former airport at Kai Tak, among the 8,925 subsidised flats to be for sale in the first quarter of next year.

About 30 percent of the new batch are smaller than 322 sq ft. Such flats are increasingly making up a bigger portion of the authority's supply, accounting for 22 percent in 2020, and 15 percent in 2019.

Francis Lam Ka-fai, vice-president of the Institute of Surveyors and its spokesman on housing policy said that while he supported the 49 percent discounts on the units, he slammed the micro-flats on offer, saying they had "become a joke".

"That's really undesirable. Why did [the authority] go for such small units? I don't know what their rationale is," he said. "In terms of the design, [anything] less than 200 sq ft is really undesirable for anybody." 

We fully agree.

The tiny flats may look like this. Appealing to you?

And to even qualify for this scheme, a single person can have a monthly salary of no more than HK$34,730 and assets worth no more than HK$925,000, while for households of two or more people, they must earn no more than $69,740 and own assets worth less than HK$1.85 million.

Who wants to live in 186 sq ft discounted HK$1.24 million (US$158,900)? What can you even fit in there? Can someone really live happily in such a tiny place? And they would have to live in it for 15 years before being allowed to sell it. 

If the government wants to encourage a higher birthrate, it really needs to build bigger subsidised flats to start with. How can one even get married let alone have children in 186 sq ft? Have these housing officials even seen how tiny that space is? 

It boggles the mind...

HNA Group's Bankruptcy Woes

Almost US$10 billion was embezzled by HNA shareholders

Remember HNA? On the conglomerate's website it says: "Sharing dreams, bring more possibilities to the world".

How about bringing more headaches to creditors and the Chinese government for having such a big company fail spectacularly on the world stage.

Hainan Airlines started in 1993

HNA Group, which owns Hainan Airways, in a very short period of time acquired companies around the world, including Hong Kong Airlines, an office tower in Manhattan, and Red Lion Hotels, and is now bankrupt.

In addition, three units of HNA says in disclosures to stock exchanges that nearly US$10 billion had been embezzled by shareholders. But the identities of these people/companies were not named. They may be revealed later.

The three units are Shanghai-listed Hainan Airlines Holding, HNA Infrastructure Investment Group, and Shenzhen-listed CCOOP Group.

A government-led team completed due diligence earlier this month and now it can move forward into bankruptcy restructuring, that will affect up to 500 companies under HNA. Caixin has previously reported HNA had 2,300 companies.

HNA bought this NYC office tower

Hainan Airlines was founded by Chen Fang and Wang Jian in 1993, and Chen had previously worked in the civil aviation authority. Wang died in 2018 after falling off a wall on a cliff during a holiday in France.

In its early days, the airline stood out from other state-owned Chinese airlines with its punctuality, in-flight service and new fleet, and this quickly won it legions of loyal travelers and expanded. Even US financier George Soros invested in the airline, its largest foreign shareholder that helped the company expand into logistics, tourism and real estate starting in 2006.

By 2017 HNA had ballooned into a global conglomerate with 290,000 employees, and 1 trillion yuan in assets. It went on a US$48 billion spending spree, buying up stakes in Hilton Hotels and Resorts, Deutsche Bank, Frankfurt-Hahn Airport, and 400,000 sq ft at the former Kai Tak Airport site to develop into a residential apartment complex.

Chen wanted HNA to be on the Fortune 100's list of the world's largest companies by assets.

But that all came to an abrupt end in June 2017 when China's financial regulators cracked down on it and other companies that went on their respective spending sprees, like Anbang Group, Dalian Wanda Group and Fosun Group.

Ex-Anbang chairman Wu Xiaohui in prison

For example Anbang tried to take over Starwood Hotels for US$13 billion and is now put under state control, and its former chairman Wu Xiaohui in jail for 18 years for fraud and embezzlement charges.

As of June 2019 HNA had 706.7 billion yuan in debt and has not updated its status since.

Gu Gang, head of the group to restructure HNA, admitted that the expansion at break-neck speed was driven by "hasty decisions", leaving HNA with "one huge bottomless pit after another", that forced it to sell its assets. 

"All we suffered and all of our efforts served only one purpose -- a successful restructuring," Gu said. "It is only through bankruptcy and restructuring that we can be reborn."

Meanwhile Chen has been kicked out of the company's Communist Party committee, a sign that he has nothing to do with the company's restructuring. Does this mean he will face further charges?

What will happen to HNA founder Chen Fang?

Hopefully this will be the end of China's "going out" phase, reckless spending, loose credit and risky leveraging of assets for acquisitions.

So much for dreaming to take over the world...

Local Tourist in Kowloon

M+ looks like a hard drive in West Kowloon

 

The coronavirus pandemic has turned many Hongkongers into tourists in our own town. This afternoon we did the same, walking from West Kowloon all the way to Kowloon Bay, a 15k stretch that surprisingly was accessible for the most part. 

The pavilion inside Xiqu Centre has disappeared

However starting the walk was a bit frustrating. We got out of Kowloon MTR station, but then it took a while to figure out where to get out -- it turns out the exit is near the ice rink -- which sadly at the moment is half melted.

Once we got out we were confronted with lots of water barriers here and there, and the place is still pretty much a construction site. We managed to get across to the area closest to the water and saw the Palace Museum being constructed, which will house a temporary exhibition of items from Beijing's Forbidden City. 

Chief Executive Carrie Lam Cheng Yuet-ngor got a lot of flak for not having a proper public consultation of the project, and instead just announced that it would happen in December 2016. Even those involved in the West Kowloon Cultural District Authority didn't even know about the project, and the architect, Rocco Design Architects  was chosen without a tender. 

Smoked salmon on toast with passion fruit tea

Workers were installing the gold metal perforated sheets on the outside of the building, which is expected to be completed next year.

M+ is the new museum for visual culture, and so far it looks like a giant... hard drive. But upon closer inspection, it seems to be made of what looks like black bamboo poles. Interesting!

The park area is occupied by many young families and people with dogs. Many domestic helpers set up small tents to hang out for the day. 

Not soon after we passed by Xiqu Centre, for traditional Chinese opera. The last time I visited, there was a Chinese-style pavilion in the middle with a tree, but that seems to have been taken away and is empty now, pretty sad looking. One of the restaurants is actually open with customers in it which is good to see. Perhaps an alternative dining spot for people in the area?

We then headed down Canton Road towards the Star Ferry and interesting to see people lining up at luxury brands to go shopping. Previously it would be mainlanders queuing up but now it's locals... but why Gucci?

Cute painting of a ferry at the Hung Hom pier

Then we walked along Avenue of the Stars and passed by the InterContinental that shut down in April. The other day I had lunch with the former executive director of communications for the hotel who was laid off at the end of June. She said she and some 20 others were left behind to literally pack up everything in the building, plates, glasses, and put them into boxes and label them.

After we passed Tsim Sha Tsui East, we headed up a bridge that quickly took us to Hung Hom, another scenic area where we took a break at NOC for a snack before powering on.

However, the waterfront promenade just kind of ended at a complex of flats and we had to walk around to get back onto another part of the waterfront towards Kai Tak, which is still a massive construction site.

When we were at Harbour City we were accosted by many real estate agents promoting a new complex called Monaco and then in Kai Tak we saw it being built. Ahhh, the pre-sale, but not many takers from what we saw.

Wanna buy a flat in a development called Monaco?

Finally after a bit of a detour we made it to Mega Box, a large orange shopping mall in Kowloon Bay. Needless to say the Ikea in there was not socially distanced, as lots of people went through there to look at and buy furniture. Afterwards we walked a block away to the bus terminus to take the bus to Causeway Bay and then I took the MTR home.

Lots of exercise and had another perspective of Kowloon side I'd never been before!

HK Govt Blames Protests for High Poverty Rate

Law Chi-kwong says the poverty rate is lower than reported

 

Yesterday the government said Hong Kong's poverty rate reached a record high last year, and the protesters were to blame.

In its annual poverty report, the government said 21.4 percent of residents were considered poor last year, up one percentage point from the year before. It said 1.49 million of Hong Kong's total population of 7.52 million were under the poverty line -- which is calculated at 50 percent of the median monthly household income before government allowances and subsidies.

The median monthly household income in 2019 was HK$28,900, which is difficult for a family to live on, and half that at HK$14,450, even worse.

Govt report says 1.49m are below the poverty line

Nevertheless, the government had the gall to blame the situation of the poor on the anti-government protests last year and the trade war between China and the United States, saying the "double whammy" caused the SAR's first economic recession in a decade.

"The unrest caused severe disruptions and battered sectors related to consumption and tourism that involved substantial lower-skilled jobs. Grassroots families were particularly hard-hit," it said, adding that the labour market worsened in the second half of 2019.

How can the government blame poverty on the protesters, when it was the government that came up with the extradition bill in the first place and refused to listen to 2 million people protesting against it that caused the months-long protests that rocked the city? 

And in any event, why does the government even allow employers to pay its workers such low wages to start with? It is the government itself that does not value these grassroots families to start with.

Perhaps after receiving a lot of heat for this weak explanation of why there are so many people in Hong Kong, the Secretary for Labour and Welfare Law Chi-kwong hit back, and began interpreting the numbers differently.

On a radio show today he claimed it was wrong to extrapolate there were 21.4 percent of people living below the poverty line in Hong Kong, based on the report his administration published.

Critics say report only tells half the story

"It doesn't tell us how many people are actually living below the poverty line. It tells us how many people would be living in poverty if the government does nothing at all," Law said.

He explained that after factoring in various social security allowances and government relief subsidies, the poverty rate was only 9.2 percent, or 640,000 people. That meant the so-called post-intervention poverty rate marginally improved by 0.1 percentage points from 9.3 percent in 2018, he said.

Law added the efficiency of the government's social welfare programs helped 850,000 residents out of poverty through Comprehensive Social Security Assistance, and Old Age Living Allowance.

However, in many cases the government makes it very difficult to be eligible for CSSA, and the allowance for seniors is a very small sum each month, less than HK$1,500.

Ng Wai-tung, community organizer for the Society for Community Organization, said the welfare chief's analysis also did not reflect the whole picture.

"It's only half correct," Ng said. "On the one hand, it reflects the scale of low-income groups before any government assistance, but on the other hand, it underestimates the harsh reality that so many people are not even earning enough to make ends meet."

White elephant projects like Kai Tak waste money

Perhaps one thing Law and Ng can agree on is that the poverty rate could climb higher next year due to the coronavirus pandemic that greatly impacted areas such as tourism, hospitality, retail and construction.

Law said the government has already rolled out multiple poverty-alleviation schemes this year.

While the effort is appreciated, the government's investment in the poor is pittance compared to how much it throws into white elephant projects like the Hong Kong-Zhuhai-Macau Bridge, the Kai Tak Cruise Terminal, and Disneyland.

If the government put more effort into really helping the poor, it would benefit Hong Kong's economy even more. Social mobility is what makes an economy stronger and gives hope to people.

But it seems the Lam administration is keen on blaming others for high poverty rates, when it is those in the position in power who have caused this problem of inequality in the first place.

 

A Scenic Way to Get Around Hong Kong

 

Could a hop on, hop off ferry service work on the water in Hong Kong?

The Hong Kong Transport Department has a novel way for people to get around the city -- by the water.

It's proposing a circular ferry route that would have at least five stops: Kai Tak, Hung Hom, Tsim Sha Tsui East, Central and West Kowloon, and it would start service next September.

"The... service aims to respond to suggestions from the community to introduce the 'water taxi' service between different calling points along the waterfront of Victoria Harbour to bring vibrancy to the harbour," the department said in its tendering document, inviting interested bidders.

The Transport Department proposes five piers to stop at

It seems to be pitched as a hop on, hop off service akin to a touring bus rather than a "water taxi" per se,

The 25km circular route would operate between 7am and 11pm on Monday to Saturday, and 8am to 10pm on Sundays and public holidays. The entire journey should not take more than 110 minutes.

Passengers would be able to buy round-trip tickets or half-day tickets and embark and disembark at any stop.

Meanwhile the bidders need to be able to ferry up to 150 passengers at a time, with views on both sides of the vessel. They can also propose other stops other than the five proposed.

Lawmaker Yiu Si-wing who represents the tourism sector, says the proposal looks more like a tour bus than a taxi.

"People expect fast and point-to-point transport from a taxi," Yiu said. "Here the 'water taxi' concept is a little bit confusing. It's more like a tourism project than public transport."

The ferry service would be another way to get around HK

We have to agree, but if you are taking a boat, you aren't going to be in that much of a hurry, are you? Many of the piers are already in out-of-the-way places, so people taking these services are not necessarily rushing. They look at it as another way to get around.

Maybe going from stop to stop will be tedious, but what better way to get around in a leisurely way without having to deal with traffic jams on the road?

Yiu also says having so many piers to maintain will be costly and that may be the case, but tourists would definitely enjoy this service, as the Central to Tsim Sha Tsui route is so short -- a 25km route would be a nice way to spend some time looking at Hong Kong from the water.

I hope the proposal does materialize -- surely not only tourists but residents would use the service too. And there's nothing wrong with tweaking it once it starts. The service at least deserves a chance.

Mysterious Circumstances, Mysterious Death

HNA group chairman Wang Jian died while visiting France

Just what happened to HNA group chairman Wang Jian?

It's shocking to hear the 57-year-old was posing on a wall in the small village of Bonnieux in Provence, France, when he fell 15 metres and then died from his injuries.

He was apparently trying to pose for a photograph when he fell from the wall that overlooked a cliff. He tumbled 10 to 15 metres to the rocks below.

Wang and Chen Feng set up the regional airline, HNA

Definitely not a good way to go.

It's an unfortunate time for Wang to pass away when his company, HNA is feeling the pressure from the Chinese government to shed its acquisitions that have been bought on ever increasing debt.

When Wang started HNA with co-founder Chen Feng, the company was a small regional airline based in Hainan province. From there it somehow managed to leverage its assets to become a conglomerate with assets worth and staggering US$230 billion.

Wang was apparently the mastermind behind all these deals, including a 25 percent stake in Hilton Hotels, Deutsche Bank, and four plots of land in Kai Tak it bought at record prices. It had planned to use some of the land to build housing for its staff.

The company also bought a luxury home on the Peak now worth around HK$550 million and is hoping to use it as collateral to pay off some of its debts. Who wants to underwrite that deal?

HNA bought four plots of land at Kai Tak at record prices

HNA even attempted to buy the hedge fund business set up by Anthony Scaramucci, a former White House communications director, but the deal was thwarted by the Committee on Foreign Investment in the United States, an intergovernmental panel that reviews overseas acquisitions of American companies.

But those ambitious dreams are over now that HNA has had to shed these acquisitions as fast as it it has bought them in the first place.

Also questionable are some of the public listed companies under HNA. Seven of those companies have had their shares suspended for months, pending on what the parent group said was a restructuring.

Then HNA said the companies would resume trading on June 9, but since then the company has not announced any new changes to its business and the shares remain suspended.

There are still questions around who really owns HNA. Wang and Chen each own a 15 percent stake, there's another mysterious shareholder, Guan Jun, who has transferred his 30 percent stake of the company into a charitable trust that was set up in New York.

Guo Wengui has claimed HNA has bribed officials

Why would he donate his shares to a charity called Hainan Cihang Charity Foundation?

Fugitive billionaire Guo Wengui has been posting images and documents on Twitter and YouTube, alleging that HNA has bribed government officials and given relatives of at least one senior government official a major stake in the company -- possibly through Guan.

HNA had strongly denied the allegations and vowed to file a defamation suit against Guo, who once had close ties to China's top spy agency.

What's interesting is that the media went through great lengths to verify Wang's death, calling the gendarmeries in Provence, because with the way things go with HNA, you are never quite sure if they are true or not...

Housing Prices Still Going Strong

Everyone still wants to get into the property market, including millennials

Young Hong Kong people might be complaining about the ever rising property prices, but this weekend they dug deep and dived into the real estate market.

According toe real estate company Colliers International Hong Kong, buyers snapped up about 250 units in four projects in the past three days, with prices ranging from HK$19,975 to HK$28,235 (US$2,545 to US$3,600) per square foot. Prices having continued to rise for 24 consecutive months, proof that housing prices aren't falling anytime soon.

Wings At Sea II in Tuen Mun had 100 units sold on Sunday

One of the projects by Sun Hung Kai Properties, Wings At Sea II, at Lohas Park, Tseung Kwan O, sold 100 units on Sunday, according to Sammy Po Siu-ming, chief executive of Midland Realty's residential division.

He said around half the buyers were millennials, who probably got help from their parents for the down payment or to pay the mortgage. This is the only way young people can afford to buy a home in Hong Kong, which was judged the world's least affordable housing market by US planning consultancy Demographia for the eighth successive year in January.

Meanwhile 78 units at Sun Hung Kai Properties' Mount Regency in Tuen Mun were sold out in three hours on Saturday, bringing nearly HK$400 million for the city's second-largest developer.

Grand Oasis in Kai Tak sold 50 units worth HK$700 million

Flats smaller than 430 sq ft on Hong Kong Island costs an average of HK$16,103 per sq ft, while for Kowloon it's HK$13,763 per sq ft, according to the Rating and Valuation Department.

Demographia's report says the media property price in Hong Kong now stands at around 19.4 times the median annual household income, compared to around 8.5 times in London, a city that is also deemed one of the most unaffordable places in the world.

Despite the financially challenges, millennials in Hong Kong are getting into the property market. They accounted for 32.3 percent of all new mortgages taken in the first quarter of 2017, up from 19.1 percent in the same period in 2013, according to figures from credit bureau TransUnion.

One 2,617 sq ft flat at Mount Pavilia sold for HK$74 million

Another developer, Wheelock Properties sold 50 units at Grand Oasis in Kai Tak within one and a half hours of its launch on Friday, raising HK$700 million, while New World Development's Mount Pavilia in Clear Water Bay, sold 17 units on Saturday. One flat that is 2,619 sq ft sold for HK$74 million, or HK$28,235 per sq ft.

Even though the government has tried to implement cooling measures to the property market, they aren't working... though it must be secretly happy to make more money from stamp duties, while property developers are laughing all the way to the bank.

Picture of the Day: Sunset from the Harbour

Looking back at Hong Kong Island (left) and Kowloon close together

A work contact I met in Manila came to Hong Kong for a short trip and invited me on a boat trip around the harbour.

She was amused that I and two other Hong Kong-based guests had never done this before -- but it is expensive, and also something we wouldn't think of doing.

However, if you have the means, it's a fantastic way to appreciate the city.

The weather cooperated too -- originally it was forecast for sunny periods and isolated showers. But in the end it was sunny and hot, with hardly any clouds in the sky.

The boat was docked at Central Harbourfront Pier 9 and then we set off eastwards practically to Shaukeiwan, hung around the Kai Tak cruise terminal, then towards Tsim Sha Tsui before finishing in the evening in Causeway Bay.

Here's my sunset shot looking back on Hong Kong Island and Kowloon.

We appreciated the opportunity to see the city from the perspective of the water, while our hostess kept exclaiming how pretty Hong Kong's skyline was.

We never tire of looking at it, but we sometimes don't stop to look because we're so busy. But today was a memorable day to do nothing else but take it all in.

Over-the-Top Housing Prices

A prospective buyer looking at Alto flats located in Tseung Kwan O

Hong Kong developers are getting even greedier.

They think there is an endless supply of customers willing to shell out almost HK$20,000 per square foot for a new flat.

On Saturday flats were for sale at Alto Residences in Tseung Kwan O. The prices were 57 percent higher than the first phase which turned off buyers. Only four were purchased in the project that is a joint venture Lai Sun Development and former Sun Hung Kai Properties chairman Walter Kwok Ping-sheung.

In October last year, the prices for the first phase were at HK$14,000 per square foot, and units sold briskly. But at a 57 percent mark-up to HK$21,980, that's too much for customers to swallow.

A showroom flat for K City in the former Kai Tak site

Today K Wah International managed to sell 23 of 42 units offered at its K City project located in the former Kai Tak airport site.

It was the sixth batch of sales, with price increases each time Last week its fifth batch sold units priced between HK$17,401 to HK$23,694 per square foot. The average price increased 11 percent compared to the first batch a month ago.

According to a K Wah spokeswoman, 584 out of 598 units in the first four batches were sold by March 7. No comment on how sales went for the fifth and sixth batches.

Alto's poor sales reflects people's sentiment -- you want me to pay how much? -- and they are not taking any of it. It's Tseung Kwan O, not Wan Chai!

In a way that's the beauty of capitalism, but the fact that these developers think they can gouge more out of consumers is just evil.

The ability to afford a home at a decent price should be a right, not a privilege.