low angle photo of multi storey building

Bell tolls for HK property giants

Sun Hung Kai Properties has said it is not aware of any attempt by Beijing to influence Hong Kong’s leading property developers to donate land for development as part of the government’s attempts to address the city’s housing crisis. It has, moreover, started to build  flats as small as 80sqft, as prices continue to soar amid a supply crunch. Most of its peers are not much better, with Wheelock, Henderson, and New World ganging up (yes, that is an appropriate word in this context) to build flats starting at 120sqft.

It seems logical to look around the rest of the GBA and wonder if Hong Kong’s exceptionalism is likely to continue for much longer where its property market is concerned. As has been shown with the slow-motion bankruptcy of the country’s second-largest property developer, China Evergrande, the central government is clearly determined to kill two birds with one stone: rein in runaway property prices, which have long been the single biggest complaint of the masses; and reduce debt levels that have built up to unsustainable levels in the sector over the past decade. It has made its intention clear to Hong Kong’s CE, Carrie Lam, who appears to be preparing a major speech centered on tackling the city’s acute housing crisis, that she must do the same in Hong Kong. Lam, for her part, has politely acknowledged that the property barons have been “more willing to cooperate” recently.

As has been written here before, Hong Kong has a role model to follow in Shenzhen, which this year will bring 100,000 new units into the market. It has also gone so far as to cap land auction prices, and has started to guide prices downward for property agents in the secondary housing market, which has caused a shock.

It would still appear, however, that Hong Kong’s mighty developers cannot quite put two and two together. That they can still think Hong Kong is run according to rules that benefit them exclusively is a measure of how long it has gone on for: they obviously still feel a certain immunity to the change that is sweeping the rest of the country. It is either that, or they know something about factional-regional political resistance to the Common Prosperity drive that no one else does.

Either way, Lam’s Policy Address will clarify all, fairly soon. The smart money would be on her unveiling a large-scale plan to fill in the sea off southern Lantau, which will take a long time to produce livable housing. But it is starting to look more possible that Lam will also be able to double down and take back land more aggressively from the hoarders developers than they might currently be imagining. Could Hong Kong replicate Shenzhen’s feat, which took five years to bear fruit?

It will be interesting to see. All the signs are there that the next few weeks will be the last hurrah for a group of geriatric men (and their sprightly offspring) who have jammed the people of Hong Kong into cages, literally and figuratively, for decades.

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