Old Kai Tak airport becomes odd new Chinatown

Every major city has a Chinatown where many of the diaspora – decades ago mostly hailing from Canton or today’s Guangdong  – can meet family and friends or shop for ingredients from home. Now some say a different sort of Chinatown is taking shape in Hong Kong. 

A residential development project is emerging as a “Chinatown” in Kai Tak, the former international airport in the colonial days, and it is not just because the land was bought by mainland property developers. An increasing number of mainland Chinese are buying up flats – in bulk. 

Local paper Ming Pao reported that Gui Lan, a retired officer from the Liaison Office of the Central People’s Government in Hong Kong bought two units in One Kai Tak. It is ironically the first project built under the scheme of “Hong Kong property for Hong Kong people.” 

Gui, also a former deputy inspector of the Social Work department, bought two units for a total of HK$14.51 million in January, based on the disclosure information uploaded on the Land Registry website by property developer China Overseas Land and Investment.

She was among the 20% of buyers who bought two units in a single sale at One Kai Tak without paying the extra 15% stamp duty launched last November because she was a first-time buyer. 

Read: How ‘HK property for HK people’ is a real joke

It is not clear whether Gui bought the flats for her life as a retiree in Hong Kong, or acted on behalf of the liaison office, which provides homes for its expanding staff.

The purchase, however, raised eyebrows among locals who believed they are the only buyers that should be entitled to the “Hong Kong property for Hong Kong people” policy. 

In 2012, Chief Executive Leung Chun-ying implemented the “Hong Kong property for Hong Kong people” policy, which restricted the sale of new flats to Hong Kong permanent residents for 30 years from the date of the relevant land grants.

Unfortunately, the original pitch of only selling flats to locals at a discounted price became a marketing blurb that falls far short of reality. The first batch of units in One Kai Tak debuted at an average of HK$15,000 per square foot last summer, surging to some HK$25,000 per square foot in January.

And the future is looking even less rosier, as mainland developers bid up the price of land, which will eventually be felt in the price of flats once they are built. 

In the past four months, the most notable purchase has involved HNA Group, a mainland Chinese conglomerate, which paid a total of HK$27.2 billion to acquire four pieces of land in Kai Tak with more than two million square feet in potential gross floor area. This translates to an average of HK$13,500 per square foot before any cement is even poured. 

The HNA purchase strongly indicates mainland developers are bullish on the outlook in Kai Tak, the so-called new Chinatown. 

With Hong Kong home prices surging to a record high, there is growing discontent among twenty-something young locals who are losing hope of ever being able to afford to buy a home.

And thus the theory about the Hong Kong property market – whether they are high-end luxury residential flats or newly refurbished apartments – rings true that real estate is targeted toward mainland investors who are looking to park their assets safely offshore. 

Last week, UnionPay barred mainland customers from using credit on its cards to purchase property in Hong Kong. It is another sign of the central government tightening capital controls following a similar move to curb mainlanders from buying insurance policies in Hong Kong. 

It is expected more measures will be implemented to yet again to cool the hot property market before Carrie Lam Cheng Yuet-ngor takes over as Chief Executive in July. But they are unlikely to have any meaningful effect because if a wealthy buyer has billions in the bank, paying an extra 15% stamp duty is mere pocket change.

Citibank expected more taxes on Hong Kong property buyers will be launched within two weeks because the administration is determined to get the overheated market under control.

But unlike most Chinatowns around the world, Kai Tak is only the place to go if you are a wealthy mainland Chinese who has plenty of cash to burn and locals can forget about it.