Lee Green Lighted to Run for Chief Executive

The State Council has approved Lee to run for chief executive

Today former Chief Secretary John Lee Ka-chiu held a very short press conference to say one thing -- Beijing has approved his resignation to run for the next chief executive.

"I have been taking part in different positions which provided me with a lot of valuable experience, knowledge and abilities. It has also broadened my vision," he said, adding he would hold another press conference tomorrow to lay out his coming plans.

Cheng supports Lee's nomination as candidate

"I thank Hong Kong and the people of Hong Kong for allowing me to serve Hong Kong in the past 45 years. I shall continue to proceed on the way that I shall be proceeding."

The race has begun -- for one candidate -- with a Facebook page set up but has no picture of Lee, while his campaign spin doctors have started working when it's looking likely to be a one-man race.

As others have noted, why go through the charade of holding a campaign? Just anoint the successor and be done with it.

Some people are dreading the possibility of a Lee authoritarian reign for the next five years, and so there could possibly be another wave in the next two months of people leaving the city.

However, the city's property developers, the tycoons, are all clambering over each other to show their support for Lee.

CK Asset chairman Victor Li Tzar-kuoi said in a statement he would nominate Lee to run in the upcoming chief executive election, while Sun Hung Kai Properties chairman Raymond Kwok Ping-luen said Lee would help restore the city's order and this will benefit Hong Kong in the long run.

Lam looking for chief secretary replacement

New World Development CEO Adrian Cheng Chi-kong and Henderson Land chairman Lee Ka-shing also threw their support behind Lee.

Meanwhile his former boss Chief Executive Carrie Lam Cheng Yuet-ngor has nominated someone to replace Lee (for the remaining two months or so) and has yet to hear back from the State Council.

Perhaps workaholic Lam could do both jobs? She was CS before...

Property Market Finally Softening but Still Pricey

Some 96 percent of the units at Cullinan West II were sold this weekend

We never thought we would see this, but developers are starting to lower their prices because of rising interest rates, a slowing economy and a depreciating Chinese currency.

This past weekend Sun Hung Kai Properties dropped the prices of its flats to an average of HK$23,893 per square foot after discounts of up to 20 percent, about 10 percent lower than a previous batch that went on sale in December.

The 364 units ranged from 269 to 1,500 square feet

It's still shocking that people are paying over HK$20K per square foot, but the market was willing to shell out, as SHKP was able to see 96 percent or 350 out of 364 units at Cullinan West II at Nam Cheong MTR station in Kowloon.

"The good turnout means the market still has liquidity. Once developers are willing to lower their selling prices by 5 or 10 percent, it will encourage investors and buyers to quicken their purchase decisions," said Colliers International's deputy managing director Vincent Cheung Kiu-cho.

The developers also offered first-time mortgages of up to 80 percent of the flat's value, much higher than the standard mortgage ceiling of 60 percent of a property valued below HK$10 million (US$1.3 million), and 50 percent for those above HK$10 million.

That's a very good enticement for first-time buyers if they can't make a big down payment.

More than 4,800 prospective buyers bid for 364 units

The flats' areas ranged from 269 to 1,500 square feet, with prices starting at HK$6.28 million. Gulp.

For an indication of the demand, more than 4,800 prospective buyers signed up for the 364 units, an average of 13 bids for each available flat. However, Alfred Lau, an analyst with Bocom International, says the sales response was "satisfactory", and expects developers to offer even bigger discounts soon.

"There are only 364 units in this batch and the pricing was not aggressive in the first place, largely in line with nearby average selling prices," he said.

Some buyers bought more than one unit -- one bought six

"If these units had come in two weeks earlier, they would have sold at the full price. This further confirms the slowing momentum. Developers may need to offer a larger discount if they wish to push the volume."

Some buyers bought more than one flat. In one case, one splurged HK$156 million for six units, five for the family to live in, one to rent out. Another bought three units ranging from 1,200 to 1,500 square feet for a total of HK$120 million.

Still staggering for most of us, but there are others who have money to spend and are looking to snap up some good deals...

Jaw-Dropping Studio Flats

Victoria Harbour flats in North point are very, very expensive...

The other day my friend YTSL passed me a story that made my jaw drop -- a 286-square-foot studio in North Point was sold for HK$10 million.

HK$10 million! (US$1.27 million)!

That's HK$10,000,000.00.

It's a new flat from developer Sun Hung Kai Properties as part of its Victoria Harbour luxury project.

"I think it will be a record for a studio flat in North Point," said Sammy Po, chief executive at Midland Realty's residential department.

Studio flats here are priced at HK$10 million

Sun Hung Kai Properties had the gall to say one of the reasons for the flat's high price was because of its relatively larger size of not even 300 square feet.

All of its 16 studio flats for sale are priced at more than HK$10 million each, an average square foot of HK$36,000.

To compare, a 181 sq-ft flat at Novum Point, also in North Point, was sold for HK$5.87 million.

The Victoria Harbour flats are more expensive not only because they have sea views, but also a number of amenities will be available, including a shopping mall and hotel.

Still -- we are gobsmacked at the price and that someone was willing to pay that much for such a small space.

But perhaps this is the new normal and we should start getting used to it...

Jaw-Dropping Real Estate

A rendering of what Victoria Harbour (the development) will look like

The other day I met up with an acquaintance I haven't seen in a while. She told me she was working on a property development called Victoria Harbour. It's being developed by Sun Hung Kai in North Point and apparently has unobstructed views of the water, hence the name.

What's the price per square foot? A whopping HK$40,000 (US$5,113) per square foot.

My jaw fell to the floor when she told me.

There are studio flats all the way to five-bedroom ones. I can't even imagine how much those would cost.

Construction of the buildings is already underway

Back in November, Sun Hung Kai Properties only released 10 units for sale, and prospective buyers had to hand over a HK$7 million cheque just to be able to view the units. If they decided not to buy, then the money would be refunded.

Victor Lui Ting, deputy managing director at SHKP said at the time that demanding the money up front was an "appropriate practice", as flats at Victoria Harbour are considered rare products.

The fact that developers can legally do this is outrageous -- the price per square foot is already a deterrent for most buyers anyway!

Included in the development will be a hotel and shopping mall of course that will be anchored by the largest Yata department store in the city. The hotel will apparently be young and hip with an all-day dining restaurant and a bar. Wonder what rents will be like for retail spaces there.

And apparently the owners (the Kwok family, now run by Raymond Kwok Ping-luen as his brother Thomas is in jail for bribery) aren't in a hurry to sell because they'd like to have some of those flats for themselves.

My jaw is still on the floor from hearing the price her square foot...

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.

Picture of the Day: Star Ferry

The view of Central on the Star Ferry going to Wan Chai last night

Last night by chance I had two appointments back to back that were situated across the harbour from each other, and the easiest route was by Star Ferry.

I rushed over from the InterContinental Hong Kong to the Star Ferry pier in Tsim Sha Tsui, and caught the Star Ferry going to Wan Chai with a few minutes to spare.

What a pleasant ride over! It was nice to have a few minutes during a quiet ride to collect my thoughts and relax a bit before rushing over to the Grand Hyatt Hong Kong for dinner.

However, my pet peeve is that the relatively new Wan Chai pier is quite a walk from the boat to the walkway to Sun Hung Kai Centre and on top of that it's smack dab in the middle of a construction site.

Nevertheless by walking fast, I was able to make the dinner on time, and during the meal had a nice view of Tsim Sha Tsui in the distance.

Retailers Change Their Tune

Did hot men result in hotter sales for Abercrombie & Fitch in Hong Kong?

A few years ago luxury brands muscled their way into prime retail locations in Hong Kong, which had the domino effect of unsympathetically pushing out mom-and-pop stores that had been there for decades.

This kind of gentrification was not welcomed by Hong Kong people -- these boutiques selling expensive fashion, jewellery and watches were catered towards mainland tourists, not the local population.

It got to the point where there were regular reports in the paper about this noodle shop closing, or that bakery shuttering because of exorbitant rents, and residents rushed to these places for their last bite because it reminded them of their childhood.

I also joked at the time that because all these food shops were closing that we wouldn't have anything left to eat.

Burberry's flagship store in Pacific Place

Abercrombie & Fitch created a stir when it kicked out Shanghai Tang from Pedder Building in Central, and even worse, was willing to pay double the rent at HK$7 million a month.

After the hoopla of having topless men with washboard stomachs (of course) doing publicity stunts around town, did that help sell millions of dollars worth of casual clothes per week?

Then there was Burberry that took over the space previously occupied by Lane Crawford in Pacific Place in Admiralty, that caused a chain reaction -- Lane Crawford then moved across the street to Queensway, uprooting a number of small shops that had occupied that area.

But now some of these brands are having their comeuppance, as mainland shoppers are not keen to buy big ticket items in Hong Kong, and instead are looking further afield to outlet stores -- in Europe and Japan where the euro and yen are weak.

Swiss watchmaker TAG Heuer is closing its store on the popular Russell Street in Causeway Bay, while luxury group Kering (formerly PPR) founded by Francois Pinault, will be asking for lower rents for its brands like Gucci, Saint Laurent Paris, Boucheron, Bottega Veneta, Stella McCartney and Qeelin.

Kering not only wants to get rent reductions in Hong Kong, but also Macau, and if these requests aren't met, some shops may have to close in the region, according to the company's chief financial officer Jean-Marc Duplaix.

IFC mall in Central is full of luxury brand stores

Following its big gamble of setting up many shop spaces in Hong Kong, Burberry Group is looking for a cut in rent, saying Hong Kong is "a challenging luxury market", while Coach says its weak sales were due to "lower tourist trends from the mainland".

On the other side, big landlords like Hongkong Land says it has received requests to decrease rent, but has refused to, while Cheung Kong Property Holdings that owns 1811 Heritage mall in Tsim Sha Tsui has frozen the rent for three years when leases were up recently.

However luxury mall owners like Sun Hung Kai at IFC mall and Hysan Development at Hysan Place and Lee Gardens have claimed they didn't receive any requests to have cuts in rent.

Chasing the mainland tourist dollar has been a short-sighted strategy all along. While the sheer numbers of visitors across the border cannot be ignored, Hong Kong entrepreneurs should not completely shut out local clientele.

Either way perhaps landlords will finally realize that their greediness was not sustainable long term...

Three More Months

An announcement will be made in less than three months about Donald Tsang

Back in March we were told the investigation into former chief executive Donald Tsang Yam-kuen "has entered its final stage", and now the latest update is that we should know in less than three months if he will be prosecuted for graft or not.

Director of Public Prosecutions Keith Yeung Kar-hung dismissed concerns Tsang would flee Hong Kong to escape legal liabilities, a scenario he said was "quite unlikely".

Should we be so sure?

In any event, Tsang is accused of accepting favours from tycoons while in office from 2005 to 2012.

Three months earlier Secretary for Justice Rimsky Yuen Kwok-keung said the investigation was wrapping up and that technical issues about laws were being sorted out.

If Tsang is convicted, he will be the highest-ranking former official ever to be involved in a bribery trial.

His chief secretary Rafael Hui Si-yan, was jailed for 7.5 years in December, after a jury convicted him of taking almost HK$20 million in bribes from associates related to Sun Hung Kai Properties. He is appealing.

In addressing criticism that the investigation has taken over three years, Yeung said: "The public is legitimately concerned about this case -- this is obviously an important case. But there is more than one facet... to the case. Compilation of certain evidence... involves investigations outside Hong Kong," he said.

"The views of outside independent counsel have been sought, and the prosecutions division has been in contact with the Independent Commission Against Corruption."

We will try to wait patiently another three months to find out Tsang's fate...

Fact of the Day: Hong Kong's Lost Generation

Remember Hong Kong Chief Executive Leung Chun-ying's comment about how democracy in the city would result in a welfare state because the vast majority of people are poor?

He's technically correct.

According to census figures, the ratio of those under 25 years of age who are still living with their parents has increased from 93.9 percent in 2006 to 95 percent in 2011. For those aged between 25 and 34, the ratio rose from 43.9 percent to 47.7 percent.

That's a lot of (aging) boomerang kids.

And why is that? Young people's salaries have stagnated, while inflation and property prices keep rising. The median income for people aged 15 to 24 remained at HK$8,000 ($1,031) for the decade between 2001 and 2011. The median income for those aged 25-34 only rose by HK$250 in the same period to HK$12,500.

Why are these people making so little money?! It's shocking to read this is the norm, not the exception.

No wonder they have no hope of ever owning a flat, and why they are out occupying the streets even in the rain today.

Meanwhile the High Court is hearing the final arguments in the corruption case involving former chief secretary Rafael Hui Si-yan and Sun Hung Kai tycoon brothers Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen.

We have heard how the Kwok brothers funneled millions of dollars to Hui to be their "eyes and ears" in government. And then we heard about what the former civil servant spent his money on -- CDs, lavish dining, hotel rooms, maintaining horses and a mistress.

Talk about the haves and the have nots.

Because of this case and how the Umbrella Movement was handled, there is no respect for the government.

How can anyone trust an institution that has no clue how to resolve the situation and also allows certain tycoons and companies to take advantage of the system to further skew the wealth gap?

This is why we need change. This is why we need true democracy in Hong Kong.

We really do have economic slaves in the city. And they are our next generation. How can they even begin to support a civil society when they can barely survive themselves?

Fact of the Day: Hong Kong's Most Expensive Real Estate

The homes at 12 Kellett Road on The Peak -- who will buy the first one?

Looking for a place to live? Hong Kong's most expensive real estate to date has come on the market.

It's the 12 houses at Twelve Peaks on 12 Mount Kellett Road on The Peak for a record HK$175,735 ($22,672) per square foot. The first house, No. 1 is the most expensive, selling for HK$819.1 million.

"The decoration cost of No. 1 is nearly equivalent to 10 percent of the selling price. It will probably be the most expensive house in the world per square foot if it fetches that amount," says Victor Lui Ting, deputy managing director at Sun Hung Kai Properties, the company selling the dozen homes.

On paper, it doesn't seem like Hong Kong's economy has any problems, does it?

Steep Fall from Grace

Happier times when Rafael Hui (centre) was chief secretary... but now bankrupt

If you file for bankruptcy in Hong Kong because you owe say, HK$75 million, then you aren't allowed to take a taxi or use a credit card.

That's the fate that has fallen on former chief secretary Rafael Hui Si-yan, 65, who is involved in a corruption case with Sun Hung Kai Properties co-chairmen Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen.

Yesterday the High Court declared Hui bankrupt for failing to repay unspecified debts to the Bank of East Asia, but he also owes money to other lenders: Hang Seng Bank, Honour Finance (a company owned by Sun Hung Kai Properties), Chong Hing Bank and Standard Chartered Bank.

Some media reports suggest the debts amount to HK$75 million, with an unconfirmed HK$60 million to BEA. One wonders what he used the money for.

Other non-benefits of being bankrupt is that you can't use credit cards, can't hire an expensive lawyer unless your family will foot the bill, and you can't live in a big house either again unless your family owns it.

We will probably eventually find out how Hong Kong's former No. 2 official got into such a deep financial hole, but in the meantime, it's public transport for Hui like the rest of us plebs.