Bargain! 50% off!

An SCMP story on the ongoing bursting of Hong Kong’s office bubble…

The Law Society of Hong Kong has bought an entire floor of offices in what was formerly the world’s most expensive tower at a 50 per cent discount, the latest among astute investors who are picking up property in the city at bargain prices.

A ‘bargain’? A 50% discount to what, exactly?

The Law Society paid HK$345 million (US$44 million), or HK$14,000 per sq ft, for 24,980 sq ft (2,320 square metres) on the 26th floor of The Center from Gale Well Group…

The purchase price was half of the HK$693 million that Gale Well paid in 2021, when its founder and CEO Jacinto Tong Man-leung bought the property from the late Ma Ah-muk. Ma, dubbed Hong Kong’s Minibus King, passed away in March last year.

…The Center, a 73-storey office tower, was sold in 2018 for a record HK$40.2 billion (US$5.2 billion) by the city’s wealthiest man, Li Ka-shing, to a group of 10 local tycoons in what was then the world’s priciest property deal. Not long after the transaction, Hong Kong’s economy was driven into a slump by six months of anti-government protests and three years of the Covid-19 pandemic.

Does the deal make the Law Society an ‘astute investor’? Leaving aside whether a professional body is (or should behave as) an investor, most of the astuteness in the story must be that of Li Ka-shing, who sold at exactly the right time. It helped, of course, that 10 local tycoons were non-astute enough to pay such high prices without asking themselves why Li was letting such valuable assets go. (Hong Kong has only one real tycoon; the rest are wannabes and amateurs.)

Assuming the Law Society really needs an entire floor of prime downtown office space, the purchase could in the long run save it money it would have spent on rent (assuming also that it has nothing better to do with its apparently significant reserves). Maybe a 50% discount on an utterly stupid price will even offer some long-term capital gains, once the office glut (still growing) is cleared – one day, maybe. It can’t be worse than the previous buyers’ experiences…

Fast forward to 2024, and several of The Centre’s buyers – including the Shenzhen-based developer Kaisa Group, the Shanghai developer Shimao Group and Ma’s family – had to put their prized asset on the market to cash out. The latest was Tong’s Gale Well, which had been trying to sell HK$3 billion of assets to prevent banks from calling on his loans. During a March interview with the Post, Tong said the three floors of The Center – for which he paid HK$2 billion between 2018 and 2021 – were “not for sale”.

Eric Lai in The Diplomat on Hong Kong’s new prison rules …

Five years after China imposed the National Security Law (NSL) in Hong Kong, most of the pillars that once upheld a free and open society – namely independent media, human rights organizations, political opposition, and liberal as well as critical voices – have been dismantled one by one. Hundreds of individuals have been arrested and charged with national security offenses, many receiving long prison sentences.

Yet the local authorities remain unsatisfied with the extent of the crackdown. They are now moving to expand their control inside the prison system.

…the CSD may request that prisoners open letters from their lawyers, potentially breaching legal professional privilege. It also now has the power to obtain judicial warrants preventing prisoners from receiving visits from certain lawyers, clergy, or medical professionals, thus obstructing access to essential professional supports of choice.

Additionally, the CSD may censor or withhold letters and books sent to prisoners on national security grounds. All these measures share a clear objective: to sever communication between prisoners and the outside world, making the prison environment increasingly opaque.