Hong Kong’s land boom leaving many behind
Tycoons thrive, but rising costs hit the poor
Mrs Lau can’t help but glance nervously at the calendar. Her next paycheque isn’t for a week, and she doesn’t have enough money to feed her family of four crammed into her small, governmentsubsidised Hong Kong apartment. Her husband can’t work, and the kids don’t understand why their mother keeps buying stale food.
“We’ll eat rice soup for all three meals,” says the 42-year-old, a supermarket cashier.
Lau, who asked that only her surname be used, has been the sole provider for her 7-year-old daughter and 15-year-old son since her husband injured his back. She makes the equivalent of $7.46 an hour.
It’s an increasingly familiar tale in Hong Kong, a city that is perhaps the epitome of income inequality in the developed world. Two decades after Britain handed the former colony over to China, its richest citizens — billionaires such as Li Ka-shing and Lee Shau Kee — are thriving, thanks to surging real estate prices and their control over the city’s retail outlets, utilities, telecommunications and ports. But not people like Lau.
“Hong Kong is an incredibly extreme case of unmitigated inequality, with very little in place to stop it,” says Richard Florida, author of The New Urban Crisis. “I don’t see it as being sustainable . . . It generates a backlash, and people just get angry eventually.”
Hong Kong has been lionised for decades by some economists as the closest thing to a free economy, with few regulations and no retail sales or capital gains taxes. More than half of Hong Kong’s working population, including Lau, live below the level at which they must pay income tax — and for the minority who do, the standard rate is a low 15 per cent.
But wages have failed to keep up with costs, leaving hundreds of thousands of people barely able to get by.
In some respects, Hong Kong is experiencing a turbocharged version of the growing divide evident elsewhere. Formerly well-paid manufacturing jobs have vanished, replaced at one end of the spectrum by highly paid bankers and at the other by lowwage waiters and floor sweepers.
Debates about Hong Kong’s rich and poor tend to come back to one word: land. Housing is the least affordable in the world, according to housing- policy t hink t ank Demographia, with median prices relative to incomes far outstripping those of Sydney, London and San Francisco. Home prices have risen nearly 400 per cent since a real estate slump ended 14 years ago.
The city has “cage homes”, wire mesh compartments barely large enough to hold a single bed. “Coffin home” berths are slightly larger and offer a little privacy, thanks to walls made of wood or plaster. For the middle class, developers have been building more micro-apartments, the smallest just 12sq m, with price tags of more than $550,000.
Almost all the city’s richest people owe their fortunes largely to real estate development. The assets of the 10 wealthiest people now equal 48 per cent of Hong Kong’s economy, according to the Bloomberg Billionaires Index.
Hong Kong’s leaders have taken some steps to help. They introduced a minimum wage for the first time in 2011. It’s now HK$34.50 an hour, or $6.10. In 2015, the first-ever broad antitrust law was passed; previously, no formal competition rules existed, apart from in telecommunications and broadcasting. Incoming chief executive Carrie Lam has pledged to step up construction of affordable apartments and improve education to help workers get higher-paid jobs.
Hong Kong certainly has economic successes to boast about. Gross domestic product per head is $62,100, greater than in Germany, Japan or France, according to the International Monetary Fund. Life expectancy compares favourably against western Europe, and Hong Kong’s citizens benefit from some of the best transport infrastructure in the world.
Hong Kong continues to construct subsidised apartments. More than 2 million people out of 7 million-plus live in public rental housing, paying an average $304 a month. Typically in outlying areas, they feature rows of identical towers of 50 storeys or more — hardly luxurious, but modern and relatively affordable. Still, waiting times can stretch nearly five years.
For Lau, the supermarket cashier, little is likely to change. Living paycheque to paycheque is actually an improvement. Before qualifying for a subsidised apartment two years ago, she had to work three jobs to make the rent on a HK$5000-a-month apartment that was half the size.
“I almost went crazy,” says Lau, fighting back tears. She still has no savings and hasn’t taken time off since 2010. “I just hope my kids have higher educational qualifications.”
Hong Kong is an incredibly extreme case of unmitigated inequality Author Richard Florida