Monday, July 7, 1997

Hong Kong Stories

Out of 100 billionaires in Asia, 13 of them are in Hong Kong. The poorest of the 13 billionaires, barely qualifying with networth of only $1 billion, is C.H. Tung, the incoming chief executive of the government when Hong Kong reverts to China.

The fable of Hong Kong's high density of billionaires, roughly one billionaire for every half a million population, is becoming familiar even in the West, usually not too well informed about the mysterious East. Some of the stories of wealth peculiar to Hong Kong are less well known and, I think, the West would find startling if not flabbergasting.

Take the former Hongkong Hilton for example. Once the largest hotel in all of Hong Kong, the owner had spent $14 million and nine months to remodel and rennovate into the "hotel of the next century. " Just six months after the reopening in 1995, the owner announced its permanent closure and bought Hilton International out of the remaining 20 years of management contract.

Why? Simple Hongkongnomics. It seems that due to its prime location, the land, if made suitable for an office building, is worth twice the value with a hotel standing on it! Since the land was appraised at around $130 million, it was no brainer to throw out the hotel, $14 million worth of improvements and all. Today the foundation for the new office tower has been laid, but the owner seems to be in no hurry, being swayed no doubt by some indication of supply in office space exceeding demand. No one so far has suggested that the owner might have miscalculated.

Recently comes another story that belong in the "can-only-happen-in-Hongkong" category. Parking spaces are so scarce in some areas that many office buildings are selling parking spaces at $100,000 or more a pop. That's in U.S. dollars for one very tight parking space. Don't have a car, you say? No problem. One of the parking garage developers is throwing a free car to the buyer. Some buyers who can't afford the millions to participate in the booming real estate market of Hong Kong are buying these spaces on speculation.

Just how expensive is real estate in Hong Kong? On a recent Sunday edition of the South China Morning Post, a feature article described the spacious accommodations that a young couple can buy in Vancouver, Washington D.C. and London but would have to pay at least five times more in Hong Kong for a fraction of living space.

Over dinner with the president of a trading company, he proudly described the merits of his young director of sales, not yet thirty years old. He said that he is paying Eugene, the sales director, over $100,000 a year and worth every penny. But the owner noted with regret, even at that salary, Eugene cannot as yet afford to buy his own flat in Hong Kong.

All that glitters from the Pearl of the Orient may be gold, but may still not be enough to get a decent place to live.