Tens of thousands of pro-democracy protesters took to the streets of Hong Kong last week. They are demanding universal suffrage, but what else could be on their wishlist?
For many, a stable and sustainable property market is the main thing, according to two experts.
Rising rents of commercial buildings and soaring housing prices have eroded Hong Kong’s advantage as a stepping stone to China, leading investors to look elsewhere.
“It is obvious that Hong Kong’s competitiveness has dropped, partly because of rising property prices,” Stanley Wong Yuen-fai, vice-chairman of the Town Planning Board and non-executive director of the Urban Renewal Authority, told EJ Insight. He is referring to both housing prices as well as commercial rents.
Property price increases “will affect the investment appetite” of overseas investors, Wong said. This is because investors would have to take into account more expensive office space, higher housing allowance and lower consumption power.
So investors may opt for other locations that offer a similar return but at lower costs, Wong said.
But things are “not too bad” as Hong Kong still have a competitive advantage in being so close to the mainland, he said.
In addition, more companies are willing to move out of Central as more work is done online. Wong said human resources on average account for more than 50 percent of operating costs while rent should take up less than 20 percent.
A willingness to work overtime can in fact help maintain the competitiveness of the city, he said. A 10 percent increase in employees’ working hours can offset more than 20 percent of companies’ operating costs.
Meanwhile, commercial space rent is expected to remain stable this and next year, “growing 5 to 10 percent”, according to Joseph Tsang, managing director of Jones Lang LaSalle Hong Kong.
But this is expected to climb 15 percent in 2016 and up to 20 percent in 2017, Tsang said. This is because office supply this and next year will be absorbed amid strong demand from multinational firms that want to stay close to China while Chinese companies would use Hong Kong as a stepping stone to overseas markets.
With commercial districts such as Central, Admiralty and Wan Chai saturated, companies are looking at buildings in Sheung Wan and Quarry Bay. Across the harbour, the government had said that East Kowloon would be developed into another central business district (CBD).
An undersupply of office buildings in Hong Kong would continue to drive rental costs up.
The next focus should be on Hung Hom in Kowloon and Aberdeen on Hong Kong island, Tsang said. Hung Hom is “quite a good choice” as it is located near the Kowloon CBD and it will be very convenient with the launch of the Sha Tin-Central rail line.
On the home front, rental costs of small and medium-sized flats will grow but will stay flat for larger apartments and luxury flats, Tsang said.
Wong expects housing demand and supply will reach equilibrium by 2017 and 2018 and stabilize as the government is pushing to increase residential land supply.
In an international survey, Hong Kong for the fourth straight year has the most unaffordable housing with a record-high median multiple of 14.9, according to a report from Demographia in January. This is higher than the 11.5 of Los Angeles in 2007 at the height of the California-led US housing crisis.
In comparison, Australia’s median was 6.3 and Singapore’s, 5.1. A median multiple of 5.1 and over means housing is severely unaffordable.
The survey covered 360 metropolitan markets in nine economies including Canada, Ireland, Japan, New Zealand and the United Kingdom.
Meanwhile, scholars have found that the quality of life in the city has declined.
The overall score of the Hong Kong Quality of Life Index in 2013 was 102.57, down 0.33 point from the previous year but better than the base year 2002 at 100, the Chinese University of Hong Kong said in mid-August.
Among the 21 indicators in the index, the housing affordability ratio was the most noticeable as it was the lowest since the index was launched, indicating that housing became less affordable in 2013.
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