MAGAZINE 47 EXPERT OPINION

 

 

Buying a property is only half the battle. Then you have to get it into shape. Alex Frew McMillan outlines a plan for first-time renovators

First-time buyers may make the mistake of thinking they’re done once they sign the “sales & purchase” agreement. But that’s really only where the fun begins. Unless you are buying a new apartment, your property will likely require an overhaul. And many people renovate even brand-new properties.

“Buying is actually relatively simple in Hong Kong,” says Chris Dillon author of Landed: the expatriate’s guide to buying and renovating property in Hong Kong. “Renovating is at the opposite end of the spectrum.”

That said, Dillon is well aware that buying Hong Kong property is not without its problems. “There is so much liquidity on the market that you are not going to find a fire sale even if you stumble on a fire,” Dillon notes. “I think a lot of people enter the market expecting to be sold. But you really have to want it.”

In fact it is the renovations that trap people more than the actual purchase process. Cost and time overruns are common, and many first-time property owners get disillusioned with the process.

“It is really easy to get emotionally involved in this and to lose your perspective,” Dillon says. “People start to fulfil their fantasies.”

That can be a good thing, of course. Everyone wants to design their dream home. But it is essential to approach the renovation with the right perspective.

David Cheng, who is director of his own design firm, Desirable Creations, says the first issue is cost. That can be hard to pin down because it depends heavily on what the client wants to do. “This is a question a lot of people ask me, ‘How much am I expecting to put into it?’ It is very hard to say. I have to sit down and understand what the client wants first.”

When forced to come up with a rule of thumb, Cheng estimates that you’ll spend around 10 percent to 15 percent of the purchase price on a renovation.

“If you bought an apartment for HK$10 million, you’ll probably put in HK$1 million,” Cheng says. The cost may be lower for a newer building and higher for an older one.

But the cost can be significant, and has to be paid in cash – it can’t be financed with a mortgage. So it is important to develop a budget and an idea of what you might want to do.

“The first thing is, like any problem, if you are aware of the problem, you are half way there,” Dillon says.

Dillon is a three-time renovator, having first bought a floor in a small office building in Central in 2002. Then he did up his own home in Pokfulam. His most recent project is overhauling an old-fashioned factory building in Wong Chuk Hang that has become his office.

To Dillon, the renovations are the payoff for the upfront pain involved in buying a property.

“You will probably have signed up for a 25-year mortgage and 300 payments,” Dillon says. “That is a huge commitment and a heavy load for most people to carry. You want to get some psychological benefit out of it, and that is where the renovations come in.”

After deciding on the plan, it needs execution. And as a property owner you need to be realistic about the amount of time a renovation is going to take.

“You are dealing with buildings that might be one of a kind, and then you are dealing with a designer or a contactor who is typically a small business person, with multiple clients or projects,” Dillon notes. “They might be a brilliant builder or designer, but they might be a lousy planner.”

Good builders are worth their weight in gold. And a good designer can outline the budget and keep a project on track.

The designer can also smooth over communication problems with builders, if the property owner doesn’t speak Cantonese. It’s rare to find contractors who speak fluent English, and some mistakes and problems in renovations stem from simple misunderstandings or miscommunication.

Normally there is a mixture of mistakes – the client wasn’t clear on what he or she wanted, the builder didn’t understand the brief, the designer didn’t explain how the client’s changes might add to the cost or timeframe.

“Do your homework,” Dillon recommends. “Know what you want before the builders arrive. Very often people get into the building renovation and change their mind half way through. Then they’re surprised when the budget goes out the window, and the schedule with it.

To ward off such problems, Cheng tries to sit each client down and work out exactly what it is they want before the project gets off the ground.

“I normally try to keep a good understanding between the client and the contractor,” Cheng says.

He has seen the whole gamut of clients, from people who tear out magazine features and want to turn their one-bedroom pad into a palace, to others who don’t even know where to start.

“Some people have too many ideas, some don’t have a clue at all,” Cheng says. “They change their minds. Clients are like that. This is what design is about actually.”

Dillon says he is generally negative about buyers, who often place too many requirements on their builders, and supportive of contractors.

“It is a blinding glimpse of the obvious – if you treat the builder like dirt, you are not going to get a good job,” Dillon says. “Treat them properly. That means paying your bills on time, being a reasonable human being.”

Builders often get a bad reputation for stringing projects along. Some less scrupulous contractors tend to take the deposit on a job then disappear until the client complains.

But contractors are typically paying their labourers by the day, so once they start work they have an incentive to wrap up in a reasonable amount of time.

Cheng said clients can be equally to blame, insisting on a string of changes in the middle of the renovation.

Many apartment owners in Hong Kong now demand custom paint colours, for instance, which need to be mixed specially for the property. That requires a two-week lead period, so the paint can be ordered, mixed and delivered.

Two weeks is fine at first – the builders can order the paint and work on other parts of the apartment – but the time lag starts to become a problem once the paint goes on the walls. If the client wants to change them then, it requires more labour, a new set of paints and extra time.

“I had one client who came up with ideas mainly from photographs,” Cheng says. “The more I spoke to the client, the more I knew he would be changing his mind every time.

“When the colours went on the walls, he had been away a week,” Cheng recalls. “Then he came back and said, ‘David, I don’t like all the colours.’ ”

The work had to be redone, with fresh paint. Fortunately this client was willing to accept the extra time and expense.

On more complex projects, it may be worth writing liability clauses into the contract, stipulating penalties for both the client and the contractor if there are delays on the project. That way, both the property owner and the contractor are covered if it runs over.

Such agreements aren’t all that common in residential renovations, where the scope of the work is fairly simple. But they are normal in office, restaurant or retail jobs, where the turnaround time may be crucial to the launch of the business.

Above all, renovating an apartment requires flexibility. But it is worth it. “Despite the challenges, and despite the fact it may be difficult to do,” Dillon says, “owning is not only do-able but it can be enormously satisfying.”