Sunday, 18 January 2015

Hong Kong: Where property prices are as high as the buildings.

We are on our annual trip to Hong Kong, visiting family.

It's a good opportunity to look at the market in London from a somewhat more global perspective; far removed from the daily anxiety of trying to buy and (more importantly) sell in Prime London.

Although HK is beset with political uncertainty as it finally comes to terms with the reality of being a Chinese 'colony' rather than a British one, its frenetic energy is as compelling as ever.

Young Europeans still pour into the city, excited to find themselves in a town where (thanks to low taxes) they can afford to live the high life. But these days it's often Mainland Chinese who are really running the show, pack the luxury shopping malls and who will define the future.

The property market here may not be as hot as it once was, but new high-rise apartment buildings continue to spew onto the market and investors are still eagerly snapping up the best of them.

Applications to buy at some developments are now so oversubscribed that properties are allocated by lottery.

For part of our trip, we are staying in one of the city's hottest property spots - Kennedy Town. This area at the western edge of Hong Kong is gradually being 'gentrified'.

The Cadogan, The Hudson and The Merton are new high-rise developments rising 30 floors or more above crumbling, older, poorer low-rise apartment buildings. What were once open fronted street level repair workshops or local laundries are being transformed into trendy bars and chic restaurants. Young expat bankers and lawyers carrying take-out lattes from Pacific Coffee are almost as prevalent as Chinese families heading out for some breakfast noodles.

Much of this transformation is due to the arrival of a major new MTR station in Kennedy Town (HK's underground), which can whisk you to Central or Admiralty in less than 10 minutes.

It's hard to think of a direct comparison in London, but I suppose parts of East London, Elephant & Castle or Vauxhall come closest.

What isn't remotely comparable however is the cost. An apartment at the latest and smartest Kennedy Town tower (the Cadogan) can cost £2000 per square foot or more. That's Knightsbridge prices to live in the equivalent of Elephant & Castle!

Given the ongoing uncertainties surrounding HK's relationship with China and the pent-up frustrations of the Occupy movement, I find this all rather confusing and at the same time encouraging.

Aside from the very real threat of some insane Islamist atrocity, London feels like a world city, a grown up if you like, whereas HK still feels some way off that by comparison. Where we have elegant terraces and squares they have showy tall towers and glitzy malls. Where we have the rule of law, democracy and a mature sense of fairness they are struggling to find an identity after passing from one colonial master to another.

Day to day life in London is also no longer massively more expensive than places like Hong Kong. OK, so taxes are lower out here (as are taxi fares). But when you look at the basic costs of housing, health, education and the often imported foods, things begin to even up.

Over here it costs £30,000 just to get your child's name down for a decent school where English is taught. And you won't get that back until your child leaves school. Fees on top will be another £30k a year. And that's not even a boarding school.

If you want good healthcare on'll have to pay for it. Big time.

And, as I've explained, even a relatively cramped one bed flat in an older Kennedy Town block can cost around £600k to buy. Or about £3000 a month to rent.

Don't get me wrong, I love HK and think it's a wonderful place for young Europeans to adjust their perceptions of the world and become less west-centric.

But, square foot for square foot, London still looks far better value from a property perspective than Hong Kong.

For that £2000 a square foot in K-Town's teeming streets, you could have bought our small (but perfectly formed) flat in Knightsbridge.

Zuma would be a stroll away, rather than the 20 minute cab ride we took to their HK outpost the other night. Harrods would be your 'corner shop' rather than the rash of 7/11s that have taken over K-Town. And your neighbour would be an Arab princess rather than a slightly resentful Chinese local.

Over on the other side of HK, in the top end middle class environs of Jardine's Outlook or Happy Valley,  the price of a 1100 square foot box with a pinched, vertiginous terrace on the 25th floor of a high rise would easily buy our 1350 square foot house in Kensington's Abingdon Road with a front garden, two terraces and two large living areas.

Currently being marketed in Happy Valley, for example, is a new block called Broadwood Twelve. Prices for the higher floors are around $HK33,000 (£2800) per square foot and the building rises to a staggering 51 floors. If I could face the stomach churning fear of living that high, the views out across the city and harbour must be truly extraordinary.

But in the time it takes a Broadwood Twelve resident just to descend to ground level, I can be on Kensington High Street or wandering into Holland Park.

To my mind, there's no comparison. And I really am trying not to be biased.

On top of this, the house in Abingdon Road is around £600 a square foot cheaper!

With both newly fashionable and older more established top end areas now more expensive in HK (and to my mind less livable) than London, it's perhaps not surprising that a major international agent with a big presence here has just predicted that a new wave of money will head west this year to buy up chunks of London.

Lets hope so.

Of course, it's not entirely fair to compare lifestyles, or indeed properties and prices. They are completely different. And there's much to be said for the way of life in both cities.

However (and Mr Farage, please note), personally I'd far rather an overbearing and expensive EU bureaucracy on my back than the overwhelming might of a Beijing government that's still communist in name (and frighteningly authoritarian in practice).