It’s common knowledge that the Hong Kong property market is one of the most heated up ones in the world, despite the recent slump, and in 2016, the 13-year cycle of this market is expected to peak. The rental yield at 2.7% remains higher than the mortgage rate at 2% – providing support. While China’s recent stock market crash stirred a debate, a significant number of well – known investors feel that since housing is a long-term investment, market volatility will not greatly affect it. But that’s a whole other debate.
The scarcity of land in Hong Kong is a pressing issue for the CEO, Leung Chun-ying, and his government. Their solution? Land reclamation in tiny Victoria Harbour. Since the 1850s, more than 60 square kilometers of land has been reclaimed, and with ongoing discussion of a third runway for Hong Kong International Airport, the will to reclaim land doesn’t seem to be swayed by the dozens of petitions signed by the Society for Protection of the Harbour or the various other organisations who have tried to stop this from happening. Their arguments include the risk of losing the white Chinese dolphin and irreversible marine pollution. A few others believe that ‘the shortage of housing is real but that is because of the deliberate manipulation of the governement’, i.e a lot of land is tied up in the vast land banks of private developers that the government conveniently fails to notice.
The opportunity cost to saving the dolphins and the harbour? Only the 50% of the Hong Kong population struggling to buy a house, an extra 200,000 flights a year, and the possibility of the property market skyrocketing in the near future. A simple 126 hectare project has the potential to house 115,000 people, but small projects like these are being shut down due to the lobbying of NGOs such as Greenpeace. The economics of the property market are simple – a short supply and exceedingly high demand leading to exorbidant prices. The government’s position is clear – the shortage of land is directly linked to a sharp decrease in land reclamation – and this has to be solved through pouring more concrete into the harbour day by day.
It’s all a game of conscience – would you struggle to afford a house or allow clear blue water to turn into a murky brown, but rest peacefully into a home that doesn’t tear apart your pocket?