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Brave Gamblers
Local property speculators have a reputation for taking their courage – and huge amounts of cash – in both hands to bet on the future prosperity of Hong Kong
| Text : Neil Runcieman | Photo : www.thinkstockphotos.com |
On June 14, 2011 sees the 170th anniversary of the first-ever auction of land in Hong Kong, at which 33 lots were sold at an average annual rate of seven pounds, eight shillings and sixpence per 1,000 square feet plus a deposit of five hundred pounds and a commitment to spend at least one thousand pounds on building works.
‘Hang on!’, cries the knowledgeable tourist, ‘It says very clearly on my photo of the Noon Day Gun plaque that the first auction of Hong Kong land was in 1842.’
Yes, it does say that. But the Nanking Treaty, under which Hong Kong Island was ceded to Great Britain in perpetuity, wasn’t actually ratified until 1843. That 1841 auction was, strictly speaking, illegal, and the British government was not amused when it found out about it. All further such acts were banned and it was not until May 2, 1842 that the newly appointed Land Officer issued notice that he would register sales and transfer of lands. Of course, that 1842 on the plaque may just have been an engraver’s error.
The illegal 1841 auction had become necessary to stablise a situation that was getting badly out of hand, with illegal claims staked, locals cashing in on all and anything, and mayhem (not for the last time) close at hand. What’s more, it wasn’t the traders who usurped power to organise the auction. It was that much-maligned at the time but ultimately reinstated hero of early Hong Kong, Captain James Elliott, RN.
So we have evidence that old habits do die hard. Hong Kong has been a cradle of frantic speculation from the outset. It found its own solutions to deal with pressing issues and was not too fussy about bending a little detail or two when it stood in the way of business.
In the wake of all that speculation, merchants set about building and the labour, more merchants and ship after ship began to flood in. Another future Hong Kong perennial quickly followed: inadequate infrastructure. Yet why exactly were those early speculators so keen to get building?
True, there was the prospect of huge profits from international trade following the Nanking Treaty. And the merchants were not new to the region either: Hong Kong’s purpose was to help them stabilise and improve a trading network that was already well established. And there was the promise of protection from Her Britannic Majesty Queen Victoria’s navy and a garrison of soldiers.
¹ Yes, I know you want to know how much that’s worth today, but it’s almost impossible to calculate accurately. However, if we generously say that £1 equals HK$25 (you didn’t mess with the pound in 1841) and calculate pro rata based on average GDP per capita of the known population per year, that £7 8s 6d could be HK$ 80,000 -100,000.00
But the stark reality was that they were building godowns and houses on a small island that had not even been deemed worthy of a name by its former owners, which housed an estimated total population of 5,000 to 6,000, including 2,000 or so living on boats around the bay known locally as the Fragrant Harbour (Aberdeen, not Victoria, as most foreigners tend to assume), whose Anglo-Scottish version of its local Chinese name was borrowed to give the island the sort of title its status now demanded: Hong Kong.
Yet far more pressing than any naming convention was the uncomfortably close presence of an implacably opposed enemy in the form of Imperial China, which was determined to wreak havoc in any way possible – and duly did.
The settlers also encountered, in very short order, disease – the new diggings released all manner of insect-borne contagion, which in 1843 alone killed 25 percent of the entire Hong Kong garrison – typhoons and an economic slump.
Oh, and then there was the corruption and criminality. Hong Kong rapidly earned itself a reputation as a refuge for every manner of blackguard and cut-throat who had ever escaped the hangman’s noose or deportation to Australia. Even Jardine Matheson admitted in 1847 that if not for all the money they’d sunk into the place, they would pull out.
But they didn’t. By the 1850s the first land reclamation had already started in Wanchai. The population was skyrocketing and the cycle of rapid boom-and-bust was established, as irresistible trading opportunities and profit margins jostled with political and economic instability, the occasional war, and the looming presence of a vast, unhappy next-door neighbour, which was vital to Hong Kong’s trade and whose own miseries fuelled the upstart’s workforce. To put it mildly, Hong Kong was not the place for the long-term, risk-averse investor.
Let’s jump ahead to the 1950s. Squatter towns abound with an estimated half a million living in them, the colonial government is wrestling with the problems of fulfilling its mandate for public housing, and business is booming amid post-war reconstruction and war in Korea. One commentator writes: “A feeling of insecurity colours nearly everyone’s lives in Hong Kong – trade unions and individual workers are never sure of work, housing, food or even the right to stay in Hong Kong. Capitalists, factory-owners and house-owners want quick returns or money back in five years, not 20, for fear something happens before. No one knows how long Hong Kong will exist or how long it will prosper.”
Plus ça change… Even today, under new long-term management since 1997 and with far more investors committed to Hong Kong, the speculator mentality persists. Hong Kong is a place to take risks, to dare, and to make money. And by far the most popular way of doing so is property.
So, the next time you look at the latest record paid at auction for a slice of the New Territories, or the price of a square foot of luxury penthouse paradise that you mistook for the national debt of Japan, and you think to yourself: “Are they totally out of their minds?”, think back to a mid-June day in Macau 170 years ago, and to a handful of prosperous merchants who were just about to break the law in order to stay in a place that was going to try and ruin them physically and financially a hundred times over.
Now that was speculation!
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