The Larvotto development rises above boats moored in the Ap Lei Chau district of Hong Kong. Under a new policy, buyers will only be able to purchase one flat and will not be permitted to resell the unit before its completion date. The guidelines issued by the Real Estate Developers Association follow a police probe into the controversial sale of luxury flats that fell through months after its developer said one of them had set a world-record price, a report said on June 27.

Source : Today – 12 Jul 2010

Hong Kong billionaire Lee Shau-kee’s Henderson Land Development said the sale of 20 luxury apartments has collapsed, ending HK$2.67 billion ($478 million) in deals that sparked a government inquiry and fueled efforts to rein in home prices.

Most buyers pulled out of the 39 Conduit Road project in Hong Kong island’s Mid-Levels district, Henderson said in a filing to the stock exchange, responding to government demands for more information on the sales of 24 units. Henderson said it has sold four of the units and will record a charge of HK$734 million in its half-year results.

The failure of the sales, including a unit that would have set a world record price of HK$88,000 per square foot, marks a setback for Hong Kong’s second-richest man as regulators try to cool the city’s surging property market.

“We won’t be cutting prices,” said Mr Lee. “Maybe we’ll make more money when we sell these apartments again.” Henderson said it was confident in selling them because of the “prestigious” location.

Source : Today – 17 Jun 2010

WHEN Sean Clifford returned to Hong Kong for a friend’s wedding in 2005, he couldn’t believe the kind of rental returns he estimated he could achieve in a year after renovating an apartment in one of the city’s old walk-up buildings.

‘I went out and looked at property, and I was shocked,’ he recalled. ‘It was a 25-30 per cent return on your cash if you took an apartment and renovated it’ in an appealing way.

The New York native, who had worked here from 1997 to 2000, started buying up old flats with special features like a rooftop or terrace.

He began with just HK$2 million (S$360,320). Now he has about 30 apartments, marketed under the brand name Soho Lofts, that he estimates are worth around HK$300 million.

Mr Clifford is one of a handful of small-scale developers who renovate apartments in the old tong lau-style tenements and walk-up residential buildings built in Hong Kong from the 1940s through the 1970s. By stripping them down, removing most of the interior walls and restoring them, sometimes with period features, the developers create real-estate gems from apartments that have decayed along with the buildings that house them.

Victoria Allan, the Australian founder of Hong Kong property brokerage Habitat Property, is reworking an eight-floor building in Kennedy Town, Hong Kong Island’s westernmost neighbourhood along Victoria Harbour.

After six years and a blizzard of governmental paperwork, she has now gutted the building and expects the work to be completed by year’s end.

In addition to adding elevator service, each floor will be an open-plan, one-bedroom apartment spread over125 square metres – net, not gross, as is often quoted in Hong Kong. The views look across the street and over the harbour to the new Stonecutters Bridge.

Ms Allan, 40, originally from Perth, felt that there was a lack of interesting upscale apartments in the city. ‘The whole idea behind it is to find space that I liked – to have something quite cool and a more unusual layout for Hong Kong, and a quirky location,’ she said, adding that she is taking one of the apartments.

She and a silent partner, whom she declines to identify, spent HK$8 million in 2004 to acquire the top seven floors of the building, which were available as a single purchase. It then took five years to move out the tenants and to buy the commercial space on the ground floor.

Now that the value of the site has appreciated, the partners have mortgaged the building to cover the renovation costs, which are expected to run around HK$25 million. ‘I’m sure it’s a different approach from what a major developer would do,’ she said. ‘The idea is to have a really usable apartment, and to restore an old building.’

The partners probably will rent the units for at least HK$45,000 per month, although selling them also is a possibility.

Although the partners could have torn down the building and constructed something like a 20-floor tower, a common approach in Hong Kong, current zoning regulations would have restricted the footprint to 60 per cent of the site. And they would have lost the charm of the original building, which has a pleasant curve to the sea-facing side and an Art Deco feel as well as an overhanging balcony that is not counted as part of the footprint.

While Ms Allan chose to invest in Kennedy Town, a 15-minute drive from the city’s financial centre in Central, Mr Clifford hunts for properties exclusively in Hong Kong’s Soho. The area, south of Hollywood Road, has a cluster of bars, restaurants and specialty food stores that draw the young professionals, particularly expatriates, whom he targets as tenants.

Mr Clifford, 47, paid HK$30 million to buy No 4 Shelley Street, a walk-up building right next to the Mid-Levels escalator that brings a steady stream of people to Soho. He has been renting out the apartments in the building, which is now for sale. The units rent for as much as HK$55,000 per month for a top-floor 750-square-foot apartment, complete with roof, that he calls ‘The Rock Star’. With an eye on developing an entire building from scratch, Mr Clifford has put No 4 Shelley Street on the market, in a public tender due to close at the end of June. Colliers International, the agency in charge of the sale, estimates the building will fetch HK$160 million.

Mr Clifford often works with Andrew Bell, an Australian who left advertising to work in interior design. ‘We are very focused on our target audience, and we don’t deviate at all,’ said Mr Bell, 54. ‘It’s a young Western or American expat, probably earning more than they ever have before, and he wants to be in the middle of what he sees as exotic Hong Kong.’

Mr Bell specialises in recapturing the apartments’ period charm by replacing features like the old wrought-iron windows with modern reproductions. ‘I feel it is a pity that this low-rise area is not regarded as valuable except by a few people,’ he said.

But that appears to be changing. Mr Bell also works with Dare Koslow, who owned a loft in the SoHo district of New York City before he moved to Hong Kong. Mr Koslow, an American advertising executive, wanted to recreate that apartment in Hong Kong – so when he had to sell his loft in 2003, it gave him the impetus, and HK$1 million, to create it here.

‘I had this available cash around SARS time in Hong Kong,’ Mr Koslow, 47, said, referring to the outbreak of severe acute respiratory syndrome that ravaged the Hong Kong economy. ‘It was coincidentally the ideal time to buy.’

Mr Koslow now owns 25 apartments, having bought, renovated and sold another five to help with financing. He has a full-time job as the regional brand marketing manager for the mobile phone company Vodafone but he spends much of his free time redeveloping walk-ups.

‘It’s become an addiction, actually,’ Mr Koslow said. ‘And at the time I started doing it, there were not that many others doing it.’

Mr Koslow currently is mired in a drawn-out struggle with the Urban Renewal Authority, a quasi-governmental entity that wants him to move out of his current place on Bridges Street, also in Soho, so it can ‘regenerate’ the area. Mr Koslow says he already is doing that, combining two flats to carve out a 1,500-square-foot apartment with bare beams and an industrial-chic style.

Both Mr Koslow and Mr Clifford say their apartments command such high rents or prices because they are an alternative to the boxy high-rise apartments that have become the norm in Hong Kong.

‘Every day there is a new one going up – they’re all white boxes, with tall glass faces,’ Mr Koslow said. ‘They’re all exactly the same and so boring and bland.’

Source: IHT – 28 May 2010

Hong Kong’s so called “cage men” may be among the city’s poorest, but rents per square foot for their dingy wire-mesh cubicles are now on a par with luxury flats in the city’s famed Peak district.

With Hong Kong’s property prices having soared over the past year and urban redevelopment shrinking the supply of older, cheaper tenement blocks, thousands of cage men still dwelling in 15-square-foot cubicles, usually crammed eight to a room in rusty tiered bunks, have seen their lives squeezed even further.

Sze Lai-shan of the Society for Community Organisation said rents for the city’s cage homes had risen around 20 percent over the past year, with some cages renting for up to HK$1,500 (127 pound). On a square-foot basis, such rents have even exceeded those of some mansions in Hong Kong’s exclusive Peak district where many local tycoons reside.

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“There have been rental price rises all the time,” said Sze. “It’s more expensive than the Peak district, which is about HK$30-40 per square foot.”

While the financial hub of Hong Kong enjoys a reputation as one of Asia’s most affluent cities, its wealth gap is among the worst in Asia, with around 100,000 of the city’s 7 million people living in tiny units of less than 60 square feet, according to Sze.

“The government doesn’t really have a perspective for helping these people,” said Sze, who called on the government to build more public housing and to ban such cage home dwellings.

According to Jones Lang LaSalle research, the value of luxury and mass residential property in Hong Kong rose 8.1 percent and 9.7 percent respectively in the first quarter.

Hong Kong’s poverty challenge has also come under the spotlight amid recent tensions to finally enact a minimum wage, pitting unionists and workers against powerful business groups who have resisted such legislation for years.

Neighbours like mainland China, meanwhile, have already enacted minimum wage legislation, and plan to increase wage levels substantially in some provinces like Guangdong on May 1.

Unionists in Hong Kong want a minimum hourly wage of at least HK$33 per hour in July to narrow the city’s wage gap, while pro-business groups say anything above $24 per hour would hurt the economy and spark layoffs.

Hong Kong’s Gini coefficient, a measure of income inequality, has crept higher over the past decade to 0.533 in 2006, making it one of the most inequitable places in Asia.

Source : Reuters – 2 May 2010