Hong Kong night view Photo: Courtesy of Hong Kong Tourism Board

Thousands of high-rise buildings, countless skyscrapers and Victoria Harbour illuminating the skyline reflect the economic success story of the Hong Kong Special Administrative Region (HKSAR).

As a world financial hub and dynamic metropolis, it is also home to famous billionaires and property tycoons who helped shape that dynamic rise and modern prosperity. 

But over the years, the income gap has worsened as the richest citizens earned increasingly more than their low- and middle-income peers.

Today's wealth inequality is widely being seen as the economic roots to months of social unrest in the city. 

Housing remains one of the most prevalent and challenging problems that many residents have to face: from low-income earners to young professionals.

The issue exacerbated public grievances and played no small part in fueling protests on the streets of the city, analysts warn.

"I don't like what they are doing on the streets, but the young people have a lot of anger," a resident living in a low-income community in the Kowloon area, who only gave her surname as Lee, told the Global Times in a recent interview. 

"Many young people have no place to live." 

The bathroom and kitchen of an apartment in a tong lau residential building in Kowloon, Hong Kong on September 2. Photo: Wang Cong/GT

Inside a low-income community in the Kowloon area, many families live in subdivided, tiny, windowless apartments in old buildings known as the "Tong Lau," which were built in the 1960s. The rooms are so tiny that, in one apartment, the cooking stove and the toilet are basically right next to each other. 

"How can one live like this?" said the tenant, who works at a nearby mall. "Even this I can barely afford to."

The sky-high housing prices are also a huge challenge for young professionals like Law, who has a decent job in the finance sector. Law and his wife, who works for the HKSAR government, live in a relatively nice apartment in the city but the monthly rent of HK$18,000 ($2,526) takes almost 40 percent of their combined monthly earning of HK$50,000.

Even with that kind of price, their apartment is only about 30 square meters which can barely fit all their processions. Asked about their plans to buy a house, Law shook his head and said "there is still a long way to go."

The city's economic miracle was partially shaped by the high-speed growth of the property market, which is also considered one of the most overvalued markets worldwide. Real estate sector accounted for about 10 percent of the city's total GDP in 2017, making it one of the pillar industries driving overall growth. 

With the boom in the local property market, Hong Kong has shifted from urban villages to a modern metropolis attracting investors around the world. Real estate has also become important asset for those who accumulated wealth while boosting other services. 

Wealth miracle

With a total land of 1,106.66 square kilometers, Hong Kong is home to about 7 million people.

However, it remains among the most expensive places in the world today for homebuyers, with the highest-value residential real estate.  

An average residential property costs $1.235 million ($2,091 per square foot) in Hong Kong, followed by Singapore at $874,372 ($1,063 per square foot) and Shanghai $872,555 ($714 per square foot), industry firm CBRE Group said in a report released in April. Ten square feet equals roughly 0.93 square meters.

As the land is mostly owned by the HKSAR government, developers bid for the land through public auction and develop residential properties. The booming housing market also helped creat a growing number of millionaires in the city, as property has become a major investment vehicle, according to media reports. 

Hong Kong's "Big Four" families - Li Ka-shing, retired chairman of CK Hutchison Holdings, Cheng Yu-tung of New World Development, Lee Shau-kee of Henderson Land Development and Kwok Tak-seng of Sun Hung Kai Properties - are also owners of the most prominent property empires. 

They have come under the spotlight amid heated social tensions over the widest wealth gap, particularly when developers are often blamed for seizing tremendous profits and driving up home prices. 

Li, with a net worth of $28.2 billion, ranked 28th wealthiest billionaire worldwide in 2019, according to Forbes. 

New World Development, with a market value of $17.3 billion, Henderson Land Development, valued at $28 billion, and Sun Hung Kai Properties, worth $49.3 billion, were ranked as Global 2000 - the world's largest public companies - by Forbes. 

Chinese mainland media outlets such as the People's Daily and the Xinhua News Agency highlighted Hong Kong's housing problems, urging the entire society - including developers - to build the city's future together. 

"It's time to reevaluate short-term and long-term interests, and strike a balance between individual interests and the overall interests of social development," said an article published in People's Daily on September 12. 

The Hong Kong developers have drawn harsh criticism in mainland media and social media. 

Property tycoon Li Ka-shing was criticized for making housing unaffordable to ordinary people and for being too tolerant to rioters, as he urged people in power to provide a way out for the younger generation involved in social unrest. 

Some Hongkongers also complained about the monopoly of the Big Four families of the Hong Kong housing market, blaming them for causing the huge wealth gap. 

"Today's skyrocket-high home prices are caused by them, who should be attacked," one online user posted on Facebook. 

Who is to blame? 

When developers became a major target to blame for the housing crisis in Hong Kong, some predominant economists have been calling for research and a return to housing affordability. 

Former chief executives Tung Chee-hwa and Leung Chun-ying made proposals but with little success in making housing more affordable. 

When Tung became the first chief executive since Hong Kong's return to China, he proposed a plan of building 85,000 public housing units. 

The plan was rejected not only by developers but also by many members of the city's middle class whose home prices plunged during the Asian financial crisis. 

"To stabilize the market and help home prices return to normality, the HKSAR government restricted the land supply," Francis T. Lui, a prominent economist and policy advisor to Hong Kong's residential housing market, told the Global Times on Sunday. 

When home prices normalized around 2005, the government did not change its restrictive land supply policies, creating a supply-and-demand issue that drove up prices, Lui noted. 

Developed land today occupies less than 25 percent of the city's land, with 40 percent reserved for parks and nature reserves. To address the land shortage, top Hong Kong officials have also suggested land reclamation from the sea. However, those measures faced backlash from environmental protection groups and opposition parties, which is often seen as part of the battle for their political purposes.

"Apart from developers hoarding land for profits, the land supply shortage is an essential factor in driving up overall prices over the years, and the HKSAR government needs more courage to tackle this issue immediately," Lui said. 

For better future 

Pro-establishment group the Democratic Alliance for the Betterment (DAB) has urged the government to seize more private land for housing projects and improving livelihoods. 

Praise for the Lands Resumption Ordinance that might boost land supply is tempered by critics who argue the government should instead produce more market-driven policies as the residential market growth affects the city's economic prospects. 

They urged Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor's office to carry out deeper housing reforms, without being held hostage by different groups for short-term interests. 

"It should understand the periodicity of the property market and the HKSAR government's policy in response to skyrocketing home prices could easily turn into a poison for a sharp fall," Liang Haiming, dean of the Belt and Road Institute at Hainan University, told the Global Times. 

A sudden housing market crash could not only lead to a downward spiral but also trigger a fresh financial crisis, he warned. 


Newspaper headline: Housing woes cause unrest