▍ Salt Finance
Author | Zou Diyang
Edit | A knife
Hong Kong, which has long carried the name of "land of bullets", is finally about to expand.
On the morning of 6 October, Carrie Lam, chief executive of the Hong Kong Special Administrative Region, delivered her last Policy Address during her current term.
According to the report, the HKSAR Government will build a livable and workable metropolitan area in the north of Hong Kong, and open up an additional 600 hectares of land for residential and industrial purposes, so as to help Hong Kong better integrate into the overall situation of national development.
Carrie Lam delivers a new policy address proposing a "development strategy for the northern metropolitan area" (Source: Weibo @ Hong Kong Wenhui Network)
In the eyes of relevant people, this initiative can be said to have a significant strategic impact on Hong Kong's future development opportunities. In addition to giving better play to Hong Kong's leading role in the Greater Bay Area and promoting the integration of Shenzhen and Hong Kong, it will also accommodate the housing needs of an estimated 2.5 million people, injecting a new atmosphere into industries such as real estate.
As a barometer of Hong Kong's economy, real estate has always been a wharf for hot money concentration. The data shows that the real estate industry itself accounts for about 5% of Hong Kong's GDP, while investment and consumption in real estate-related industries once accounted for more than 30%.
At the same time, the high leverage ratio also brings various sequelae, the most acute of which is the difficulty of high housing prices.
<h1 class="pgc-h-arrow-right" data-track="26" > the past</h1>
Speaking of the madness of the property market, in front of Hong Kong, the north, Shanghai, Guangzhou, and Shenzhen can only be regarded as a small witch.
According to the 17th annual International Property Affordability Survey released by Demographia, an international public policy advisory, this year, Hong Kong has topped the world's most unaffordable property market for 11 consecutive years, with a median property price to median household income ratio of 20.7 times.
What concept?
It takes nearly 21 years for an ordinary Hong Kong family to afford to buy a house in Hong Kong without eating, drinking or paying taxes without saving almost 0.
Such an exaggerated threshold, on the surface, seems to be linked to the crux of Hong Kong's high population density and the contradiction between land supply and demand. The other half's contribution stems from the power of capital that hovers over the world's most "free" economy.
The plane flew over Hong Kong residential areas
Among them, the "four major families" of Hong Kong real estate, composed of Li Ka-shing's Cheung Kong Industrial, Lee Shau Kee's Henderson Properties, Cheng Yu Tong's New World, and Kwok Tak Shing Family's Sun Hung Kai Properties, have worked together to create the myth of soaring housing prices on Hong Kong Island for more than half a century.
Although you are the people at the top of the wealth pyramid, in the beginning, they are no different from other Hong Kong commoners, and they all began to struggle as "apprentices".
Lee Shau Kee learned to do gold shop business with his father since he was a child, practiced the ability to distinguish gold, and came to Hong Kong with 1,000 yuan at the age of 20 to earn the first pot of gold;
Cheng Yu Tong dropped out of school at the age of 13 to make a living in Macau, worked in Chow Tai Fook's gold shop, and later gradually took over Chow Tai Fook's business, becoming a famous "jewelry king" in Hong Kong;
The heads of the four major families, from left to right - Guo Bingxiang, Li Shau-kee, Li Ka-shing, and Zheng Yutong
In his early years, Guo Desheng followed his father to run foreign miscellaneous wholesale, and after the war, his family moved to Hong Kong to open the "Hongchang Heji" grocery store, and later Guo expanded it into a Hongchang Department Store wholesaler, and in 1952, he established the Hongchang Import and Export Company, which sold throughout Hong Kong, Macao and Southeast Asia, known as the "King of Foreign Miscellaneous Goods";
The most well-known "superman", Li Ka-shing, is relatively humble among the four. Born as a "street boy" (salesman), he became the general manager of the company at the age of 20, and borrowed 50,000 yuan at the age of 22 to establish the Yangtze River Plastic Factory, successfully opened the Hong Kong and Southeast Asian markets, won the title of "Plastic Flower King", and was regarded as a model of grassroots counterattack.
Looking back at the turning point of their fortunes, most of them were around the 50s.
At that time, the influx of a large number of people from the mainland, coupled with the high land price policy implemented by the British government in Hong Kong, led to a surge in demand for housing.
Armed with abundant original capital, they sniffed the gold mine of real estate almost at the same time and began to march separately: Li Ka-shing purchased land in North Point of Hong Kong Island in 1958 to build a 12-storey industrial building, named the Cheung Kong Tower, as the first step in the transition to the real estate industry.
Hong Kong Cheung Kong Group Centre and its surrounding buildings
In 1963, Kwok Tak-shing took Lee Shau Kee and Fung King Hee to reorganize Wing Ye Enterprises and renamed it Sun Hung Kai Properties, and the three were collectively known as the "Three Swordsmen" of Hong Kong Real Estate. Zheng Yutong, during the low tide of real estate in 1967, together with his friend Yang Zhiyun and others, bought a large number of real estate properties, and established New World Development two years later, with Zheng Yutong accounting for the largest number of shares and serving as managing director.
In the 1970s, benefiting from the benefits brought by the industrial transfer of developed countries, Hong Kong's manufacturing industry took off, and the status of one of the "Four Asian Tigers" was determined, and real estate rose with it, stepping into the fast lane of development.
In 1972, Sun Hung Kai Properties, New World Properties and Cheung Kong Industrial, under the name of Li Ka-shing, were collectively listed. Four years later, Lee Shau Kee established henderson Land Development Co., Ltd., which was successfully listed five years later, ranking among the top four real estate developers.
The frenzy of real estate construction in Hong Kong has begun.
<h1 class="pgc-h-arrow-right" data-track="176" > the rain is coming</h1>
Although hong Kong's housing prices have soared to an astonishing level, since World War II, it has experienced several nodes from prosperity to decline.
Some of these crashes may be attributed to external economic turbulence, such as the energy crisis in the 1980s, the Asian financial tsunami in 1998, and the US subprime mortgage crisis in 2008, and some are related to political trends. But in terms of internal drivers, it is undoubtedly the result of speculation by real estate developers.
Real estate is already a profiteering industry, relying on the wealth accumulated by speculation, the four major families quickly controlled the economic lifeblood of Hong Kong, engraving their names on the Forbes list.
In 2021, Hong Kong will become the city with the highest housing prices in the world, overpowering international metropolises such as Shanghai, Paris and New York
Among them, Li Ka-shing, who has been the richest man in Asia for many years, is undoubtedly the most well-known name to the outside world. The key to his victory now seems to be both controversial and represents the extraordinary vision and tactics of this group of real estate tycoons.
In the decades from the 1960s to the handover of Hong Kong, whenever the outbreak of a political and economic crisis implicated the market and wealthy businessmen transferred assets, Li Ka-shing took advantage of the chaos to buy land and old buildings. In addition, he bought the Hong Kong Electric Company at a very low price, taking the entire island's power business into his hands.
"When the streets are covered in blood, it's your best time to invest." The calm wisdom of this chaotic situation, also known as the "Hong Kong model", is the key to walking the real estate industry, and it has become the bible for investors to follow in the future.
And counting the housekeeping skills of the four major families, in addition to the hoarding law, there is also a factor that must be mentioned: selling house flowers.
The so-called sale of house flowers, also refers to the pre-sale system of commercial housing, not the patents of the above several, but another legendary giant businessman Fok Ying Tung pioneered, the earliest in the 50s in Hong Kong began to be popular, because Hong Kong people are accustomed to the building units under construction or no construction as "floor flowers" and named.
A generation of legendary giant businessman Fok Ying Tung
The sale of the house before it is built not only relieves the burden of the developer to withdraw funds, but also brings many uncertainties to the real estate transaction, including the risk of empty gloves and white wolves. But it has proved to have significant effects on accelerating capital turnover and opening up a new path for the real estate industry.
At the same time as the property market is expanding rapidly, the head players have also targeted the mainland - this cake blank that is on the eve of reform and opening up and has yet to be cooked.
After 1978, under the leadership of the Fok Ying Tung family, real estate companies such as Changhe, New World and Henderson flocked to the mainland. In addition to vigorously supporting infrastructure construction, this group of strategists who are deeply engaged in real estate and have elite business capabilities have also migrated new species such as speculation in real estate, 70 years of land property rights, pooled area, and land finance.
Since then, the inexperienced mainland market, which is raising housing reform, has begun to copy the Hong Kong property market.
From the logic of speculation to the land management system, all links work together to concoct an arbitrage game of unprecedented temptation.
Under the surface of prosperity, the leading mainland real estate enterprises represented by Evergrande, Vanke and Country Garden have finally appeared immature compared to their Hong Kong counterparts in terms of profitability and risk response, and the bubbles that frequently appeared in the late Hong Kong property market are also like a mirror, reflecting the hidden worries of the mainland economy's excessive dependence on real estate.
A real estate developer was exposed to the negative news of arrears of project payments
In Hong Kong, the market characteristics of oligopoly are not only in the real estate industry, but also in the living of ordinary citizens, from water, electricity and gas to daily necessities procurement, and even taxi licenses, which are under the control of several major chaebols.
There is a popular online essay for primary school students, so it is written: "Li Jiacheng, worthy of the name, Hong Kong is the Li family's city." ”
Excerpts from essays for elementary school students
Therefore, it is not difficult to understand why Hong Kong's housing and livelihood problems have become increasingly serious in recent years. The former international financial center, driven by the single engine of real estate, has long reached the most difficult juncture in history, and it is urgent to need a new "hematopoietic" program.
<h1 class="pgc-h-arrow-right" data-track="177" > the way to change</h1>
A new film released a while ago, "Turbid Water Rafting", depicts a group of rough sleepers living under the Sham Shui Po Overpass in Hong Kong.
Due to the limited quota of public housing and the difficulty of applying, the vast majority of them have to live on the streets and face the possibility of violent eviction at any time.
Screenshot of the movie "Turbid Water Rafting"
In Hong Kong, such marginalized groups are not uncommon. The high cost of housing has given birth to spectacle-like living forms such as "cage house", "subdivided house" and "coffin house".
According to media reports, in a "cage house" in the Mong Kok area of Kowloon, there are 11 beds in rooms of less than 19 square meters that can be rented, in other words, the average person is only 1.6 square meters to live in.
Curled up in such a narrow space, the psychological level of repression can be imagined.
Typical pigeon cage dwelling
In response to the shortage of land supply, the government has issued various improvement regulations, such as the "Ding Housing Policy", "Ten-Year Housing Plan" and "85,000 Housing Plan".
The original intention was to dilute housing pressure and ensure social order, but in the process of implementation, the drawbacks gradually emerged.
One of the main reasons is the lack of overall planning. Taking the "Ding Wu Policy" as an example, land waste, labor shortage (more people lying down to collect rent), transfer for profit, etc., have reduced the promotion of the system. In addition, a large number of public housing development in Hong Kong is the responsibility of private real estate developers, and for the sake of small profits, their enthusiasm for public housing construction is not high.
Hong Kong's cramped "coffin room"
Under the encouragement of the traders, the military hearts of the "house worship cult" have fallen to the side of the four major families, believing that raising house prices is the best way to "save the market". Carrie Lam's vision of "Lantau Tomorrow" put forward in 2018 – a 20- to 30-year-long land reclamation plan – was aborted with fierce public opposition, and even public figures such as Andy Lau, who had a good reputation, became the target of shelling for supporting reclamation.
On the other hand, this also makes people think deeply, to expand the land for housing, do we have to take the sea route?
Or is the scarcity of Land Resources in Hong Kong a false proposition?
According to the Hong Kong Planning Department, of the total land area of 1111 square kilometers, 270 square kilometers of land has been built and developed, accounting for 24.4%, of which only 6.9% is used for the construction of houses; the remaining 75.6% of the land is non-construction or unbuilt areas, such as country parks, wetlands, fish ponds, etc.
Fish pond wetland by the side of a high-rise building
It can be seen from this that the extremely limited utilization rate is the root cause of the shortage of land use.
In the past few decades, Hong Kong has not been able to effectively combat real estate hegemony, which is largely inseparable from its identity as an independent economic unit. The aforementioned grievances, combined with low taxes and a policy strategy of minimizing intervention, give real estate developers profitable conditions.
Today, after the return of the political situation to stability, Hong Kong, which is backed by the normal track of "one country, two systems", has more confidence to plan for development and rebuild the urban spatial pattern. This is also the driving force that immediately aroused people's attention and discussion on "New Hong Kong" after the promulgation of the "Policy Address".
Industrial layout map of the northern metropolitan area (Source: Weibo @ Hong Kong Wenhui Daily)
In contrast, the end of the real estate "god-making" movement.
Among the four major families, Guo Desheng died in 1990, the eldest son Guo Bingxiang died of illness in 2018, Zheng Yutong died in 2016, and now Li Ka-shing and Li Shau Kee have also stepped down, so that the first generation of leaders of the four major families has all ended.
On the other side of the river, Internet giants such as Ma Yun, Ma Huateng, Zhang Yiming, xu Jiayin and Wang Jianlin have also long taken the place of this group of people on the rich list.
The scene of the dusk of the gods this time, linked to the business empire that was once ruled by them, made the viewer feel a lot of emotion.
The picture of the new era is unfolding, and Hong Kong will take more flexible regulatory ideas as the fulcrum to evolve towards the "Singapore model", break the shackles of commercial housing, and increase the per capita living area by increasing financial subsidies and preferential treatment in affordable housing, thus playing a good example for the mainland.
It is undeniable that the northern metropolitan area is currently only a concept, and for the landing of the top-level design, this is destined to be a journey with many challenges. Fortunately, change has happened.
Resources:
1. "The Beginning and End of Hong Kong's "Northern Metropolitan Area" Planning: Rebuilding a New Central? Jiao Jian, Financial Magazine
2. "All Curtains! Hong Kong, no more real estate tycoons", Kai Fengjun, Zhengshang reference
3. "The "Honor and Disgrace and Sharing" of Hong Kong's Real Estate and Economy", Guo Xinyu, Wall Street News
4. Can Real Estate Stand Firm? The Hong Kong mirror of leading real estate enterprises", Yang Xuran, a talent