Thursday, 20 October 2011

Property Hegemony

R9353045L (Ricoh GX200)

Property Hegemony is a hot issue in the city.  It refers to the near or actual cartel comprising the local tycoons in the property market.  A worthy read on the topic is a book titled Land and the Ruling Class in Hong Kong by Alice Poon, a former assistant to a local property tycoon, who wrote it after she migrated to Canada. The book won the Canadian Book Review Annual a few years ago. 

Property hegemony is not an illusionary thing.  Alice has given her readers lots of data to justify the debate.  For example, in 2010, the six richest local clans who are all property developers controlled 14.7% of the Hong Kong stock market value.  This gives a glimpse into the result of the fact that while from 1991 to 1994, 70% of Hong Kong’s private property were built by seven property developers, 55% out of this amount was developed by four of the seven developers.  Today, most major property sites are owned by the biggest three to four among them.

The adverse impacts are very strongly felt.  Hong Kong is the third most expensive Asian city for living costs; fourth most expensive metropolitan city for property costs – worst than Tokyo; second most expensive city around the world for commercial premises rents.  These are not the most updated data yet.  Never has Hong Kong been so hijacked over the property rentals and purchase prices.  Exactly because every economy is so very reliant on land, and the land in Hong Kong is monopolised by the big property developers, it strips the businesses off their bargaining power in competing for rented premises and the common people in purchasing homes.  In bad times or good, a whole lot of earnings and profits go to the major property developers, who have used the enormous proceeds to extend their control to public utilities, retailing and public transport companies.  The situation is complicated by what is known as the high land-price policy, which in the end turns into a de facto land tax heavily burdening the masses. 

This tilted development has grown a deep-rooted property speculation culture among the local upper-middles, which, worse still, is fuelled up by the nouveau riches from Mainland China.

How polarised has all these made Hong Kong in terms of wealth?  In 2009, Hong Kong is on a par with the Switzerland in terms of GDP, which amounted to US 43,000 dollars.  That was pretty cool.  But the poor and the rich were then living with a wealth gap at as high as 43.4 Gini Coefficient, second to the 43.6 of, guess where, the Central African Republic.

In 2009, out of its some 7 million population were 1.23 million people living below the poverty line.  Simply put, one out of seven on the street was poorer than you know.  Among these unprivileged lot, 10 thousands called the “caged men hostels” home.  They themselves are known as the caged men.  What are caged men hostels?  Venture into some old area in Hong Kong and you will find some dilapidated pre-war residential buildings, or known as tenement buildings.  In them are apartments split into a number of 20-by-20-metres cubicles which are cramped with three-level bunker beds.  Each caged man rents one of the levels for what they call home.

If you wish to learn more about the topic, read Alice's book.

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