While local Hongkongers are crazy about modern housing estates and new property projects, Dare Koslow, an expatriate who has lived in the city for twenty years, has fallen in love with Tong Lau, or old tenement buildings.
The US national has over the past decade bought 25 Tong Lau properties in Central and Sheung Wan, done some refurbishment and leased out the units to other foreigners who don’t like to live in high-rise cubby holes. The oldest property that he owns has over 60 years of history.
However, the 60-year-old building has reached the threshold for the compulsory auction of buildings, meaning that the government has the right to acquire the property in order to facilitate redevelopment, regardless of the owners’ will.
In fact, one of his properties has been already on the crosshair of the Urban Renewal Authority (URA). The Authority has acquired half of the units in the building, and offered a good price to buy Koslow’s one as well. But he turned down the offer.
“I am not doing this for money. I want to preserve the old buildings in the city, this is my passion,” Koslow says.
There has been talk that the URA may apply the Land Resumption Ordinance (LRO) and seek to forcibly acquire the unit.
If that’s really the case, Koslow plans to seek a judicial review.
“It is shameful for the government if it is really doing this (applying the LRO). This is the difference between New York and Hong Kong. The latter’s government can do whatever it wants, and the citizens do not have a say in it,” Koslow said.
But investing in these old buildings has risks. Some Tong Lau properties were not in good shape because of their age. So Koslow has to spend a huge amount of money to renovate them.
For example, he bought a 1,200-square-foot unit in a building which is next to the former Police Married Quarters (now known as the PMQ, a creative and design stores hub) ten years ago for HK$7.2 million (US$930,000). The total cost shot up to HK$8 million due to renovation work.
So if the URA really forces Koslow to give in for the sake of redevelopment purpose, it would be a huge loss for him given the massive investment.
Every investment has risk, Koslow admits. It is lucky that no other properties of his are on the redeveloping list.
As land scarcity is a big problem in Hong Kong, Koslow has faced questions as to how he can oppose URA’s redevelopment plans for Tong Lau. To this, he has this answer:
“Why not consider redeveloping other kind of properties such as factory buildings?” he says. “If demolishing Tong Lau buildings is the only way to increase housing supply, then Hong Kong would only become uglier. Furthermore, the traffic would be overloaded in the districts.”
Koslow loves interior design. He likes to add modern touch to traditional Chinese settings.
He was an advertising executive of Vodafone in Hong Kong. He quit his job recently in order to devote more time to his Tong Lau passion. To him, being a full-time landlord is much better than working for big corporations.
“It is less stressful,” he says.
With property prices having skyrocketed in the past few years, Koslow says he wished he had bought more Tong Lau flats in the past.
He agreed that property prices are unreasonably high right now. Koslow believes a correction could be around the corner.
Prices could drop 10 percent when the US Federal Reserve hikes interest rates later this year, he says.
The article appeared in the Hong Kong Economic Journal on May 22.
Translation by Betsy Tse
[Chinese version 中文版]
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