Page last updated at 19:08 GMT, Tuesday, 24 November 2009

Little space for Hong Kong's poorest


Chan Hon Keung: "We share one toilet, we share one kitchen."

By Pauline Mason
Editor, BBC Asia Business Report, in Hong Kong

Cubicle resident Chan Hon Keung
Mr Chang says his rent has risen

Home for Chan Hon Keung is a two by three metre hardboard box.

His cubicle is one of 16 on the fifth floor of a run-down concrete building in the Mongkok area of Kowloon.

Little wooden ladders lead up to the lattice fronts of the upper cubicles. These are coffin-sized homes for Hong Kong's most desperate.

Mr Chan shares a tiny kitchen and a single, stained toilet pan with nine others. In other blocks as many as 40 people may have to share.

But that hasn't stopped the rent from rising.

"I used to pay 800 Hong Kong dollars ($103; £63). Now it's HK$1,000," says the retired cleaner.

According to Hong Kong's Rating and Valuation Department, residential rents in all property classes rose an average of 10% in the nine months to September.

Charity worker Sze Lai Shan and her team hand out clean bedding to residents. There is no heating and no running water at the cubicles, and winter has come early to Hong Kong.

The 81-year-old Mr Chan is one of the 100,000 people who live like this in Hong Kong, she tells me. "The number's risen about 10% in the past year.

"About half of them are elderly, but increasingly, young people and families are moving into these cubicles."

Property boom

Across the harbour, high-rise apartments nestle so closely you can almost reach out and touch your neighbour.

Ladder going up to the upper cubicles
The top cubicles have to be accessed using a ladder

Hong Kong Island is one of the most densely populated places in the world.

Seven million people and finite space - two factors which make Hong Kong property some of the most expensive in the world.

In fact prices have risen an average of 30% since their trough in October last year. They're now back to their early 2008 level.

Last month, an apartment in a very modest-looking block sold for US$57m. That is a record-breaking $9,200 per sq ft.

The proud new owner is reported to be an investor from mainland China.

Alnwick Chan, executive director of property agency Knight Frank is one of many who blame the new boom on "hot money" from China.

"Mainland Chinese have been coming to buy properties since the collapse of the market last year… that's supported by the mainland Chinese authority," he said.

Last week the Hong Kong government published the most recent data on capital flowing into the territory - HK$500bn has poured into Hong Kong assets.

Most of this is thought to be funds from China. And most of the money has been invested in property.

The rest has flown into Hong Kong's stock exchange, helping to push up share prices more than 80% in 12 months.

Inflation fears

Hong Kong's return to boom has sparked fears of a return to inflation. Not just in Hong Kong but also in other Asian hotspots like Singapore.

Alnwick Chan
Estate agent Alnwick Chan says money is pouring into Hong Kong from China

Fast-rising prices are already putting property out of reach for those on lower incomes.

The fear is that trend could spread to other basic essentials like food or utilities.

Unlike in other economies, Hong Kong interest rates are not used to target inflation. Instead they are adjusted to maintain the Hong Kong currency's value against the US dollar.

So a weak US dollar keeps the cost of borrowing artificially low and there is no option to follow the example of the Reserve Bank of Australia and raise interest rates.

Instead, the Hong Kong government has tried to temper the rise in property prices.

Last month it raised the minimum down-payment on luxury properties and tightened up lending regulation to encourage banks to lend more conservatively.

Mainland China is also trying to help. It risks creating its own property bubble in major Chinese cities.

Last month, the People's Bank of China called for retail banks to reduce lending and thereby restrict the flow of cheap money to Hong Kong, the mainland and the rest of Asia.

Print Sponsor

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific