19 April 2019
CY Leung launched the "Hong Kong property for Hong Kong people" policy in 2012 (inset). A unit in 
One Kai has just fetched HK$30,000 per square foot. 
Photos: HKEJ
CY Leung launched the "Hong Kong property for Hong Kong people" policy in 2012 (inset). A unit in One Kai has just fetched HK$30,000 per square foot. Photos: HKEJ

How China developer destroyed ‘HK property for HK people’

Forget the so-called “Hong Kong property for Hong Kong people”.  Not only does it not work, it goes in the opposite direction.

Consider One Kai Tak, the first and only project restricted to permanent residents.

In its latest release, developer China Overseas Land and Investment boasted about its record-breaking sales.

A 1,606-square-foot unit in the former airport site was sold through tender for HK$48.19 million (US$6.21 million), or a whopping HK$30,000 per square foot.

“It is a record price,” said Tony Yau, a director and general manager of China Overseas Property. “It reflects strong demand for such a unit size.”

He must be kidding.

When One Kai Tak was launched five months ago, it was initially priced at half the price, although the above unit was said to be scarce because it is in a low-rise block with separate sewage facilities.

What can explain the sharp surge in residential prices in Kai Tak despite an obvious tightening of the housing policy such as the 15 percent stamp duty launched in November?

Enter HNA Group, which has secured three plots for nearly HK$20 billion. The average price of the land acquired last month was HK$13,400, similar to the level when One Kai Tak was first launched.

The weak yuan may have pushed the overseas acquisition of the rich and mysterious conglomerate but at least HNA is the real and willing buyer.

When the group bought the first plot of land, a few local developers expressed disbelief and ridiculed the new buyer. They said HNA must have thought the land cost included construction costs.

Whatever the reason, so much for Hong Kong property for Hong Kong people.

If the first project has been priced at a sky-high HK$30,000 per square foot, we wonder if it would mean the East Kowloon site may be as pricey as the Kowloon station site.

Perhaps the government forgot to throw in an important clause — that developers should also be local.

Chief Executive Leung Chun-ying implemented the “Hong Kong property for Hong Kong people” policy in 2012, his first year in office.

Under the policy, the government will, at the time of selling selected sites, add land lease conditions restricting the sale of the flats developed at the sites to Hong Kong permanent residents for 30 years from the date of the relevant land grants.

Now it is this policy that seems to defy the government’s best efforts to cool the market.

Yesterday, Hong Kong Monetary Authority chief executive Norman Chan said cooling measures have curbed the rapid expansion of credit in the housing market.

But Chan stopped short of saying it is an effective policy. He said he still needs more time to determine that despite a significant drop in home deals in the last two months last year.

Well, a deal like One Kai Tak killed Chan’s optimism, and the dreams of many locals to have an affordable home.

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EJ Insight writer

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