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Discuss culture, living, traveling, relocating, dating or anything related to the Asian countries - China, The Philippines, Thailand, etc.
2 posts • Page 1 of 1
High-rise route to a Hong Kong fortune
Expat English teacher Linda Kernan on the night her small flat in Hong Kong turned her into a 'millionaireâ€™.
Sky-high: Chinese speculators are driving up Hong Kong prices Photo: DBURKE / Alamy
My mobile rang in the middle of my English class recently, breaking all the rules. This was bad enough, but I actually took the call, getting the undivided attention of the whole class. The news was not something an English language instructor will hear very often.
It was my estate agent, Derek, who had been pestering me for months to sell my tiny (350 sq ft) flat in downtown Hong Kong. His line was: â€œThere is a buyer whoâ€™s very interested.â€� At first, I suspected that no such person existed. The agent approaches both potential parties, initiates an interest by appealing to their greed, and eventually pulls off a sale. It occurred to me later that the arguments Derek was using on me were the diametric opposite to those he was using on the buyer.
I was initially not keen to sell, as this flat was my pension fund, but the figures were spiralling into the stratosphere. For the fun of it, I quoted a â€œcrazy priceâ€� just to get rid of him. Thatâ€™s when the phone rang.
â€œThe buyer accepts your full price,â€� said Derek.
â€œI donâ€™t believe you,â€� I replied.
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â€œYes, 4.5 million!â€� said Derek.
â€œBut he said he wouldnâ€™t go beyond 4.2.â€�
â€œThat was yesterday,â€� he said. â€œI kept pushing him and heâ€™s signed. I didnâ€™t want him to sleep on it and change his mind.â€�
Just like that, I became a millionaire â€“ in HK dollars. I desperately wanted to share the good news with my class, but thought better of it. They are local building engineering students studying English at night for their degree after a hard dayâ€™s work to improve their career prospects. Many still live with their parents in cramped conditions on public housing estates. Owning a flat in Hong Kong is now way beyond the reach of the average young worker. The society is becoming polarised into landlords and tenants, the latter being at the mercy of the former.
How did I come to be in this fortunate pecuniary position? Certainly not by design. I came to Hong Kong in 1994 as an EFL (English as a Foreign Language) teacher. Young people enter TEFL to travel to exotic places and meet interesting people, not to make money. After 1997, when Hong Kong returned to China, property prices dwindled until mid-2003, when the SARS epidemic drove them to their lowest point.
I bought my flat, through Derek, in 2002 for HK$1,750,000 (Â£140,000). It is at the top of Possession Street, so named because it marks the spot where the British first planted the Union Flag and took possession of the territory. I had to save hard to raise the 30 per cent deposit required to get a mortgage, and then keep working hard to pay it off. My building was in an inauspicious neighbourhood, dominated by temples, coffin makers, cobblers, printers, metal workers and colourful shops selling intricate paper offerings to burn at the temples for oneâ€™s ancestors. My 26th-floor flat overlooked a quiet public garden. Back then, it even had a sea view.
In the mornings, as I ran for my bus, I had to dodge old men in pyjamas taking their pet birds for a walk in their bamboo cages. The flat was cheap because it was not easily accessible. The tiny streets were higgledy-piggledy with steep staircases. The sweet smell of burning incense hung in the air.
Fast forward nine years and the area is a target of the Urban Renewal Authority Project. The quiet streets and low-rise buildings are being gentrified. Mid-century tenements called â€œtong lauâ€� are being spruced up and turned into art galleries, chic bars and restaurants or boutique hotels.
Attractive and leggy Americanised Chinese, clutching their Starbucks, jump into taxis which will whisk them into the Financial District in five minutes. Not a pyjama in sight.
Two years ago, I rented out my flat to one of these beautiful women. She divides her life between Goldman Sachs and the bars, and uses my flat as a walk-in wardrobe/place to rest her head. I remortgaged the property and bought a remote place on an outlying island. My commute is 80 minutes, entailing two ferries and a 20-minute walk through the woods. There are no cars, and the only noise is from the cicadas and birds.
In the last year, property prices have been driven up 25 per cent by mainland speculators. With the Chinese yuan now worth 20 per cent more than the HK dollar, they are flooding the market with sizzling-hot money. They prefer glitzy high flats near MTR station hubs and gleaming shopping malls, and pay in cash. My flat was snapped up by one such buyer, sight unseen with my tenant intact; small change for them, a small fortune for me.
After my class, I met Derek at the ferry pier. He handed me the provisional sales agreement with sparkling eyes, and a pen. He probably did not want me to sleep on it, either. A celebratory drink would have been in order, but I had to catch my 10.30pm ferry. Derek promised to visit me in my island village house soon â€“ a social visit or an evaluation?
I have been toiling away in classrooms in four countries for 30 years. Teaching English is both exhilarating and energy draining. It can lead to burnout and a frugal retirement, but not in my case. A friend of mine commented on my good luck: â€œItâ€™s nice that the little people can make money sometimes, not just the speculators and the bankers.â€�
Yes, it is rather nice.
"The object of life is not to be on the side of the majority but to escape finding oneself in the ranks of the insane." Marcus Aurelius, Roman Emperor and stoic philosopher, 121-180 A.D.
Currently, about 9% of US RE sold to foreign investors are bought by PRC nationals, coming in at 2nd place behind Canadians. Taiwan has just lifted the "scripted' tourism requirement for PRC tourists -- previously mainland tourists to Taiwan must come in groups with pre-determined programs. Now they can go roam around freely, and many have started investing in RE in Taiwan. From Chinese investor's perspective, the RE prices in places like Taichung would seem cheap compared to Beijing and Shanghai.
The RMB : USD exchange rate stayed at 8.27 : 1 USD up until mid 2000's, and now it's around 6.5-6.6 : 1 USD. I think it'd continue to rise in value, making it cheaper for PRC investors to buy RE abroad.