Housing Worlds Apart

The luxury development Mount Nicholson on The Peak

Last Friday, the Hong Kong government made a surprise move when it raised the stamp duty on real estate for non first-time buyers to 15 percent in a bid to curb property prices.

But it seems buyers have found a way to circumvent the tax -- by putting their multiple flat purchases into one agreement.

It happened on Sunday when one man, considered a first-time buyer, purchased four flats at Met Bliss project in Ma On Shan for a total sum of HK$19.93 million.

Because all four units were put under one agreement, he was able to avoid paying HK$1.6 million in levies.

And then today two adjoining luxury flats on The Peak were sold for a whopping HK$912 million, or HK$104,803 per square foot, making it the most expensive price for a flat in Asia.

The deal is for two flats at Mount Nicholson for a total area of 8,702 square feet and includes three parking spaces.

Entrepreneur Sandy Wong rents out capsules in Hong Kong

The selling price beats out the previous record set in 2015 by 39 Conduit Road in Mid-Levels for HK$103,762 per sq ft.

"Rich families are most concerned about the prestigious location and quality of the project, not the stamp duty," says Thomas Lam, head of valuation and consultancy at Knight Frank.

"Investors buying small to medium-sized units will be hit hardest by the latest property tax, but not the richest [investors]," says Lam.

Of course. Stamp duty to them is part of the cost of buying the property in the first place.

But these people are living on another planet compared to the rest of us, some of who are perpetually saving because real estate prices keep going up and salaries are not keeping up with inflation.

Or perhaps you should give up dreams of trying to buy a flat and live the minimalist life in a capsule?

An enterprising man from Guangzhou has rented out flats where each person can rent a capsule space of only 2 metres long and 1.1 metres high, about 25 sq ft.

A government brownfield site in Wang Chau, Yuen Long

The monthly rent ranges from HK$2,800 to HK$4,500 depending on the location. All the occupants have to share the bathroom, kitchen and common area.

Sandy Wong says he has received a lot of inquiries, and many of the renters live far from their workplace, or maybe their home is being renovated, or they've had marital problems and need a space to live in temporarily.

These "space capsule" homes are inspired by the Japanese capsule hotels, but those were for salaried men who missed the last train and just need a cheap and clean place to sleep in for the night. These are for renting monthly.

Is it me, or is the Hong Kong housing market completely out of hand now?

And yet the government doesn't want to do anything to disturb the rural strongmen who are occupying government land in the Wang Chau that could house some 13,000 people...

Cracks in Heung Yee Kuk?

Heung Yee Kuk chairman Kenneth Lau will be sworn in as a lawmaker...

Are we seeing weakness in the notorious rural force known as Heung Yee Kuk?

Its chairman, Kenneth Lau Ip-leung was elected uncontested last month in the Legislative Council elections, and he will take the oath of office on Wednesday.

It was suggested in their internal meeting that 10,000 rural villagers show up to Legco to demonstrate their support for Lau, but now that has drastically been scaled back to a few hundred at most.

While Li Yiu-ban, a kuk ex-officio executive councillor who is helping to organize the rally, says it's better to have less people at Tamar because it "may cause inconvenience to others", others say Lau isn't taking a strong enough stance on rural issues like his father, Lau Wong-fat, who stepped down for health reasons after running the kuk for 35 years.

... and so will Eddie Chu (left) who exposed the kuk's violations

The rally was also meant to protest against incoming legislator Eddie Chu Hoi-dick, who has single handedly exposed kuk members bullying the Hong Kong government in the Wang Chau development in Yuen Long.

The Wang Chau site is a brownfield site the government had wanted to take back to build some 17,000 flats, but some kuk members are using it -- and profiting from it -- and refuse to hand it back, forcing the authorities to retreat and instead develop a green-belt area nearby and evict residents of three villages.

This whole fiasco has made the kuk realize they need to revamp their image and plan to hire a public relations firm to help them.

While the Basic Law protects the traditional rights of indigenous rural residents, rural leaders says it should include hillside burials, the right to build small houses and exemption from government rent.

Perhaps the strongman days of Lau Wong-fat are over?

At the same time there is no official figure on the number of indigenous residents in Hong Kong who can trace their male ancestry back to residents of the New Territories in 1898, though some rural leaders estimate it could be at least 300,000 of them.

So while the Heung Yee Kuk wants to put a positive spin on its image, who is going to believe it?

Peter Lam Yuk-wah, a public relations consultant, said rural leaders should give up the idea of a PR campaign to get people to accept their views and instead be prepared to make compromises.

"A campaign is more than forcing your views on others. There will be feedback. And how are you going to deal with that feedback is more important. Otherwise, you can make things worse," Lam said.

Perhaps members of the kuk need to realize Lau Wong-fat's strongman days are long gone and the only way to repair the PR damage is to do the right thing and return the land to the government...

More Questions than Answers

What do you see here? Leung speaks to the media, Tsang looks on

This afternoon Hong Kong media descended on the Central Government Complex in Tamar, where everyone waited with baited breath to hear what Chief Executive Leung Chun-ying and Financial Secretary John Tsang Chun-wah had to say about the disputed number of flats to be built in Wang Chau in Yuen Long.

While Secretary for Transport and Housing Anthony Cheung Bing-leung and acting Secretary for Development Eric Ma Siu-cheung were also there, everyone was watching the body language between Leung and Tsang, but not much happened.

Leung had said there were plans for 17,000 flats for public rental and home ownership schemes, but that somehow got severely scaled down to 4,000. Why?

Here is a summary of what was basically said during the press conference in chronological order:

Cheung revealed for the first time that the housing department met with the rural leaders four times -- in July and September 2013, and twice in March 2014.

Anthony Cheung speaks to the media in the press conference

In the first two meetings, the rural strongmen strongly opposed the 17,000 flats, and only on March 12, 2014 was the plan of building 4,000 flats discussed.

[So what happened here? How did it get from 17,000 to 4,000? What was exactly said in those meetings, particularly on the March 12, 2014?]

Leung denied caving into the rural leaders, stressing that housing was a top priority for his administration. He added that Hong Kong's social problems stemmed from land shortages and his government would not stop finding land to develop.

[We don't need to find more land, we need to redevelop more brownfield sites, and the one in Wang Chau has a parking lot run by one of the rural strongmen who has refused to concede it to the government.]

Then both Leung and Cheung denied taking part in lobbying for the Wang Chau project, that it was the job of technocrats. Cheung also said that feasibility studies would be done on the second and third phases of Wang Chau (following the theory that the 4,000 flats were the first phase), and that the flats would be completed would be 2026-27.

[So we are still going ahead with kicking out residents from the three villages to make way for the 4,000 flats? Why can't we use that brownfield site for 17,000 flats instead?]

Pan-democrats and localists aren't impressed

When Cheung was asked by the media why district councillors did not know Wang Chau would be developed in stages, he just replied that documents already mentioned that they were discussing the first phase and that the remaining parts were an ongoing study.

[Officials seem to use the phrase "ongoing study" alot...]

Meanwhile Director of Housing Stanley Ying Yiu-hong (who is under Cheung) dismissed the suggestion that the public were not consulted before relocating the residents of three villages where the 4,000 flats will be built.

"We value public opinion, but it cannot replace our professional analysis," Ying said. "To implement stage one, we went through [four] procedures: consulting rural leaders, consulting Yuen Long District Council and publicizing the relevant documents, consulting the town planning board where people submitted their petition and we discussed them and the project was gazetted."

[Did Ying really say that? So you the public can tell us your opinion, but we won't listen to it anyway. What kind of attitude is that?]

Whenever Tsang spoke, it was to deny there were any tensions between him and his boss and that he had minimal involvement in the discussions...

By the end of the hour-long press conference, Leung got teary eyed saying, "I have to thank my colleagues because it was a toiling task for them, to every little achievement." He said the Wang Chau plan "is a good opportunity to show the government's determination, and the difficulties faced by it in boosting housing supply".

Then he abruptly got up and left to go to the airport to greet Hong Kong's Paralympic team.

So where does this leave us? The government is trying to give united answers to questions, but we have even more queries, with the crucial ones not even addressed, particularly why 17,000 flats dropped to 4,000 and what was said during these meetings with the rural leaders.

The pan-democrats and localists weren't impressed either and plan to grill the government soon after they are sworn in on October 1.

Is this the issue that will break the camel's back?

More importantly how does Beijing see how Leung is handling the situation? Are Chinese officials shaking their heads and wondering what their alternatives are, or do they think Leung's tearing up was a nice ending to get some sympathy points?

Stay tuned.

Cracks are Showing

One of the villages in Wang Chau fearing eviction for housing development

Incoming lawmaker Eddie Chu Hoi-dick has definitely opened a can of worms and senior government officials are squirming in their seats.

He claimed there was a "government-business-landlord-triad collusion" behind the scaling down of a public housing project in Wang Chau, Yuen Long in the New Territories.

Chu alleged the government had originally planned 17,000 flats to be built on the site, but it was reduced to a paltry 4,000 flats because of opposition from powerful rural leaders.

Leung claims he didn't make deals with rural leaders

These 4,000 flats are planned to be built on a site where there are three existing villages, instead of on a brownfield site that could yield 13,000 flats, but is controlled by rural leaders.

Chief Executive Leung Chun-ying denies bowing to pressure from these rural strongmen, saying this was only the first phase...

But even more interesting is how Leung and Financial Secretary John Tsang Chun-wah have made different responses to the issue.

Leung said that while he chaired a task force on Wang Chau in 2013, he claimed Tsang was involved in the deliberations as part of the task force that also included Chief Secretary Carrie Lam Cheng Yuet-ngor.

However, Tsang's office told the media that while he was part of the task force, he did not attend the one and only meeting.

And even Cheng distanced herself from the issue, saying she was not a member of the task force or steering committee.

John Tsang denies being involved in any task force

As Tsang and Leung seem to be vying for the top job next year, Leung appears to be trying to drag down his opponent by trying to lump the responsibility of the Wang Chau issue on him.

Regardless, Chu isn't impressed by the responses from the government so far.

"Their statements are only confusing the picture," he said. "The public want to hear one full account from the government, not 10 different stories."

Indeed.

Being unable to get a straight answer proves the government is trying to hide something, and it's possibly that it may have colluded with rural forces. It's not a new story, but it confirms that something is up.

The tensions between Tsang and Leung in the days and weeks to come could reveal even more than they want us to know.

In the meantime, we should praise Chu for shining a spotlight on this issue -- and he hasn't even been sworn in yet.

Surely those who voted him in are already pleased they chose the right guy for the job...