UBS is wrong.
It does not take 18 years to buy a 600-square-foot flat in Hong Kong. It takes much longer or involves smaller units — or both.
In its annual UBS Global Real Estate Bubble Index, the Swiss bank says Hong Kong has the least affordable housing among global financial centers, dwarfing New York, London, Paris or Singapore.
That means a skilled service worker needs to save 18.5 years -– without accounting for the cost of living — for a 60-square-meter apartment near the city center.
An average income earner with a monthly salary of HK$15,055 will hardly make ends meet even if his salary is doubled, the bank says.
Hong Kong rents fell 8 per cent last year but the report did not take into account a summer rally this year.
For example, Nan Fung priced Island Garden in Shau Kei Wan at a HK$8.75 million minimum, or about HK$18,000 per square foot for a 485 sq. ft. unit.
That’s an eight-digit sale price for a 600 sq. ft. new home on Hong Kong Island.
How can a young man of 30 making HK$20,000 a month even dream of buying a 600 square ft. flat?
Expatriates and rich mainland uncles are taking up precious space because many locals can’t afford it.
In a way, we could say local developers are trying to address the issue by making their units smaller.
Henderson Land sold out its small but expensive One Prestige development in North Point for a minimum of HK$3.87 million.
It is all good except the units are only 163 square feet, the tiniest available on Hong Kong Island, so the average price per square foot was as high as HK$25,000.
We wonder how much prestige the buyer really gets for living in an area the size of two car parks and not much bigger than a prison cell.
Henderson is an expert at developing small units with its new H collection linked to alluring words such as heart, hallmark, handcrafted, harmony and hospitality.
What Lee Shau-kee and his family don’t tell you is that the unit is modest but the price is massive.
Welcome to Hong Kong (another H in the collection?).
This unique Hong Kong brand has caught on in mainland China and elsewhere.
A relative in Guangdong said more Chinese developers are building Hong Kong-style housing — small units in core areas priced sky-high.
A friend in Toronto also noticed that newly developed service apartments in his neighborhood are looking very similar to small flats in Hong Kong.
Indeed, the world is getting smaller.
So is home.
– Contact us at [email protected]