At first sight, Cheung Kong’s sale of individual hotel suites at its Apex Horizon project looks like yet another in Hong Kong’s long history of inexplicable property loopholes. Over the years, land sold cheaply for hotel development has mysteriously ended up with for-sale ‘serviced’ apartments on it. Buildings that were supposed to be x floors high mysteriously ended up 2x or 3x floors high. And so on and so on. Developers made billions in extra profit against the spirit of the outline zoning plan/land lease/plot ratio mumbo-jumbo after some never-identified bureaucrat used his discretionary powers to alter the letter. Meanwhile, the Independent Commission Against Corruption goes after some boy scouts or something.
It does appear, however, that this project is kosher – or at least the loophole is a general one, applicable to all hotels built under land leases finalized before a particular date. It is legal for a developer of such a hotel to sell individual units. The anti-speculation stamp duties would not apply, as this is commercial, not residential, property. The buyers would therefore be investors hoping to make returns from rentals. Presumably, they could let to themselves and thus use the property as a de-facto residential unit.
However, commentators warn, they could be busted simply for cooking in their new home, let alone changing the furniture. Indeed, the whole building could be confiscated (and wouldn’t that be a sight to warm the heart?). The government has issued a rather vague warning to would-be buyers. The latter, needless to say, are turning up in droves to put their money down as if these were HK$2 million parking spaces Cheung Kong is putting on sale. Which maybe they are, in a way.
For a change, it’s arguably not the Hong Kong taxpayer being cheated here. But can we say the same for the purchasers of these units? As anyone who has read Alice Poon knows, Hong Kong developers have honed their money-making skills to the extent that home-buyers go on paying them for life. They do this by owning the estate management companies and charging residents monthly fees for security, swimming pools, clubhouses and other facilities. Who knows how much extra profit, rising in line with inflation, this rakes in from each apartment sold over the decades?
Now think how much in management fees you would have to pay if you owned a unit in a hotel – a building purpose-built to be crammed full of little-used facilities and services, from business centres to guest refrigerators to laundries to little shampoo bottles. Could it be that Cheung Kong boss Li Ka-shing’s wily managers have identified an amazing golden goose: a development people can sleep in, built on cheap commercial-zoned land, with built-in income streams, and with Hong Kong and Mainland easy-money zombie-lemmings blind to any down-side (possibly additionally mesmerized by the magic Superman ‘Li’ factor) jostling to sign the contract and hand over the cash?
Since we don’t need to ask whether there are any limits to what we might politely call property developers’ ‘appetite’, let’s look on the bright side. Let’s ask whether, in fact, Li Ka-shing is the good guy here and deserves not a bronze, not a silver, not a gold Bauhinia Star – but a platinum-plated plutonium one for this genius money-spinning idea. Or, as the South China Morning Post more somberly puts it…
Now don’t get too excited. Hotels in Hong Kong can provide lucrative returns, and a sensible investor would be an idiot to sell one. But, having said that, times are strange. Lunatics are paying millions for parking spaces. It’s a bubble. You can go back into hotels later when the whole thing has crashed.
Many hotel owners in Hong Kong could use this loophole and emulate Cheung Kong’s Apex Horizon model (and remember many of them are the fellow tycoons who rather pathetically imitate Li’s other ideas, like dotcoms and REITs). By selling hotel rooms as quasi-residential units, they would give Hong Kong a new supply of homes (chuck a hot plate in the corner – the government will never find out).
But wait! There’s more! This would mean less room for legitimate hotel guests. This is a genuine counter-tourism measure if ever there were one.
The experts say that the government can’t plug this loophole because of sanctity of contracts blah blah blah. It would be the ultimate win-win. And what a beautiful prospect: the parasitical property-tourism monster eating itself.
Which brings us to… Fun Juxtaposition of the Day Award, which goes to the Standard for putting this week’s story about a Mainland tourist letting her kid pee in a Hong Kong restaurant (well, a Tsui Wah) right atop an ad for the pretentious L’Atelier de Joel Robuchon high-class eatery. That should subliminally induce a few cancelled reservations.
CY will rise the challenge and push a large cream pie into SIr Professor Dr Dr Dr Dr Dr Li’s face. Just watch and see.
For some time, we all thought CY was the Undead or at least a Vulpine Warrior Of The Wastelands tinged with the gore of Peking Man.
He is simply Mephistopheles – der Geist der stets verneint. The spirit which eternally negates.
Just Say NO is his motto – as Allan Semen, milk-toting toerags and most of the malodorous property chicaners have found out.
Look at his pre-election speeches to see what his vision of Hong Kong is. Yes, he had one. And there is no room in it for Li, Lee or Kwok.
As for peeing in restaurants, at least that is better than biting policemen. League of Social Democrats (LSD) groupies should be tagged, chipped, muzzled and kenneled. It’s the only language these people understand.
And where CAN anyone pee in a hurry in Hong Kong?
I noticed the juxtaposition. Assuming that it was not incompetence -perhaps a rash assumption, this being the Hong Kong Standard – all credit to the editor who did it.
Other wonderful examples of such juxtaposition that spring the mind were the constant running of stories about Christine Keeler next to those about certain UK government officials – readers of a certain age may remember that.
And, putting a picture of a funeral pyre for some Indian politician next to a headline referring to an upcoming cricket tour – All set for the Ashes.
I did wonder why so many hotels were receiving planning permission on remote coastlines without — yet — road access.
Microwave ovens with browning elements and always-on kettles are presumably allowed in hotel rooms — should cover nearly all styles of cooking.
Is it just me or can one feel sympathy for civil servants trying to make some headway agaisnst such devious and kiasu’d citizens?
Peter Kammarara in the — soon to be nationalised — SCMP recently visited his first “small house” and was suitably jealous. It’s when articles begin to appear praising the clean air, complete control over your massive independent building — with windows! — and friendly neighbours (sic) that the multiple property owners should start to panic (RTP please take note). The end is nigh.
I have no idea whether what KS Li is doing – flogging hotel rooms and thus avoiding the buyers stamp duty – is legal or not. If the clowns pumping their money into his tills lose – well more fool them.
However, before Octogenarian KS Li leaves us, I would like, for once, for him to be held to account. He’s managed big pay days from previous “projects” like Coda Plaza and two seventy-storey mega structures in Whampoa where other mere mortals would not have.
Perhaps the ‘Big Spender incident’ shows his preference for Mainland law and his disregard for Big Lychee Law. However perhaps his realization that very few people now look upon him favourably – tough for a man of his immense ego – is account enough.
@ PD : I only have one property. and it’s quite small but cosy
( But that’s at least one more property than Michael Chugani has))
RTP, You told us you had more than one property several months ago. Have you amalgamated or sold some?
@ Stephen. Li Kaching is doing this as a reminder to the HKSARG bufoons (like John Tsang) as to who really runs the biggest show in town…..
Only ever had one property in HK, which is where I live
(I did once buy a small investment property in about 2000 thinking the market had already bottomed … how wrong I was ! I got out of that as soon as the prices post- SARS got back to 2000 levels. Wish now I had held it longer )
I detect the whiff of illegal structures. I think we ought to send some inspectors round to RTP immediately.
RTP, You wrote “Most of my money is tied up in HK property , bought at the bottom of the various troughs in the past 20 years”.
You must have started with a cage home and the number of chandeliers and amount of marble must now be huge if you’ve ended up with just one quite small flat.
I started with a tent in Sai Kung country park
This is where HKers fall sadly behind Mainland savviness. At the selling rate of Horizon, doesn’t one smell a rat? If LKS, can milk blood, he would.. even if it like a “time sharing” or whatever, its still below market value, meaning buyer’s beware. On the other hand, seen time and again, Mainlanders buying medium size apartments in good areas like Ma On Shan and renting it our slightly cheaper than hotel rates. We see new faces every other day including Japanese, Filipinos etc.. We are told there are tons of websites in China advertising these places.
And most appropriately on the 10th anniversary of SARS, please do not pee or poo2 where you like. Its not a matter of adapting to HK culture but universal hygiene and common sense…. in your face James Tien!! Till the next 50 million!!
RTP, Is that where you did your PhD in maths?
… in good areas like Ma On Shan….
‘good’ as compared to Pyong Yang ?
Focusing on the important issue here: Mainland children pissing in my local cha chaan teng!
#1: How common is it for Mainland mothers to carry pee bottles for their children?
#2: There is no “quiet corner” of any that or any other Tsui Wah.
#3: The staff “speaks loudly” to everyone; the woman was lucky that it was a staff member and not a crabby local that spotted her.
#4: Kudos to the Standard for taking the opportunity to run not one but two pictures of (unrelated, presumably Mainland) children relieving themselves in public.
I lied about the maths thing. It was a PhD in analytic and algebraic topology of locally Euclidean parameterization of infinitely differentiable
“Next thing: you’ll be able to buy just the bathroom”. Ah, but who’s going to buy it? Not the otherwise voracious mainlanders, since many of them apparently don’t know how to use one and prefer a bottle instead.
We appointed a property management company owned by SHKP, they came round did a song and dance about how much money they could save us.
After 3 months in we started asking for the books, they came up with excuses not to provide it. After about 8 months we found out they had stolen hundred of thousands from us by way of charging for things which never happened. No life guards on duty, broken air conditioners in the gym for 3 months, they claimed they were tendering it out to a mainland company to fix. They replace a $5 light bulb with one bought from another SHKP entity for about 4 times the price it should be. We kicked them out but have little chance of getting the money they stole back nor suing them with the financial muscle they have
They are all crooks and govt is well in on it. Why can’t a normal street be built here like anywhere else in the world and houses sold. why do we have to pay thousands per month extra for nothing. we all live in communes
One of the keys to successful living in Hong Kong is to never buy anything from Cheung Kong Holdings, unless absolutely necessary. And by necessary I mean: you would have no electricity otherwise.
It is surprising that KS cs are picking this fight with CY cs at such a sensitive time, as it would seem that the odds of winning it are non-existent.