Workers in Hong Kong are expected to benefit from running affordable housing

China is threatening to overthrow the empires of Hong Kong – where they were strong enough to be seen as shadow ambassadors for the Asian economic capital – and force them to fix the city’s housing crisis.

Despite Beijing’s outrage, wealthy individuals, who have acquired their wealth through Hong Kong’s expansion into one of the most expensive real estate markets, are expected to reap the benefits as the government enacts new laws on affordable housing.

Although billions of Hong Kong billionaires, such as Li Ka-shing, a non-citizen of CK Asset Holdings, have been snatched by Chinese and Indian rivals in the region, they remain among the richest and most influential leaders in Asia. Sun Hung Kai’s Kwoks are the second richest family in the region, according to a 2020 Bloomberg survey. Others include the sons of an unborn man, Lee Shau-kee of Henderson Land, worth $ 31bn, and Adrian Cheng of New World Development, a third-generation billionaire scion precious Cheng Yu-tung.

For years, real estate executives wielded great power in Hong Kong political parties until anti-government protests began in 2019. Beijing criticized the protests for being dissatisfied with the real estate market instead of seeking Hong Kongers for it. to protect the human rights and freedoms of the people. after being delivered to the city in China from the UK in 1997.

Critics say Hong Kong’s government’s plan to sell large plots has benefited the wealthiest people, who are the only ones who can afford to participate in the trade. Instead, the government harvests close proximity to property sales, which make up about one fifth of Hong Kong’s revenue.

But under pressure from Beijing, Carrie Lam, Hong Kong’s president, last month announced cheaper housing options, including a plan to turn the New Territories in Hong Kong, near the border with China, into a residential area called the Northern Metropolis. If properly prepared, the city would have 2.5m people living in new homes with an existing 926,000.

Despite the increase in house renovations, Philip Tse, a property specialist in China and Bocom International, said the plan could benefit the wealthy. The northern city can take 15 to 20 years to see. At the moment house prices are expected to rise due to the lack of available space, Tse said. “Deficiencies can be much bigger, giving them away [the tycoons] invaluable power, “he added.

The government’s focus on the New Territories section could also help developers to reopen agricultural areas in their former red tape banks. Four major developers, Henderson, Sun Hung Kai Properties, New World and CK Asset, have acquired major banks, mainly in New Territories of 100m sq ft of undeveloped farms, according to experts and company reports. The four declined to comment. Housing prices soared after Lam’s proclamation of the northern city.

The head of a Hong Kong-based brokerage firm said it had started buying Henderson Land in line with the city’s northern plan. “When they begin to build, they [net asset value] they will double, ”he said.

Investigators said that although major developers were affected by the epidemic, their recent economic impact was stable. Sun Hung Kai also reported a 1.7% annual increase in profits, which do not include real estate revisions, to HK $ 29.9bn ($ 3.8bn) last year on June 30, while New World profits were up almost 6%. at the same time.

Henderson’s initial profits rose 51 percent in the first half of 2021 compared to the previous year, probably due to earnings. CK Asset, announcing the “inflation rate”, also reported a 30 percent increase in profits in the first six months of 2021 compared to the previous year.

The tycoons need to tread carefully, however. Xi Jinping, President of China, has launched a campaign known as Common prosperity against social inequality, to prevent sexual immorality.

“Ordinary development should also be taken seriously in Hong Kong,” said Chen Zhiwu, a professor of economics at the University of Hong Kong. “Home builders in Hong Kong will be forced to pay for charities or to provide political insurance coverage; is under tremendous pressure. ”

In fact, the New World two years ago provided about 3m sq ft of agricultural barns to the Hong Kong government, while Henderson said he had rented about 500,000 sq ft of government grants to meet the needs of those who were waiting for housing. While experts say developers may need to offer more in order to survive, this will not affect profitability.

“You give 20,000 sq ft even 100,000 sq ft. . . that doesn’t matter to them, ”said Tse of Bocom International.

A Chinese official said that although Beijing was not happy with the tycoons, they would not be able to get involved in politics directly because of the “one country, two systems” that gave Hong Kong the independence of the post-independence movement.

But no matter what economic power they may have, Beijing is determined to put an end to their political power. China reduced its influence in the recent elections, which a Beijing attorney general said was necessary to address new housing barriers.

“Excessive and illegal rule by law [Hong Kong’s] builders need to be broken, and social justice must be done, “Tian Feilong, director of the Chinese Association of Hong Kong and Macau Studies, a rational think tank, told The Financial Times.