|
Territorial army
Have you noticed how everyone seems to be decamping to the New Territories these days? Alex Frew McMillan finds out why
Like many expatriates who move to Hong Kong, Kevin McGlynn and his wife, Angela, initially chose to live in the Mid-Levels. They weren’t sure how long they wanted to remain in Hong Kong and always imagined they would educate their children back in their hometown of Ayr, on the west coast of Scotland.
But after a trip back home, they decided they had lost touch with their roots and felt more at home in Hong Kong. They decided it was time to put down real roots in the city. McGlynn and his wife moved to Clearwater Bay in 2006, seeking some more space for their two small children.
They initially rented a village house in Lobster Bay, or Lung Ha Wan, one of the most popular villages for expatriates. But after discovering they enjoyed living in a village, they decided to buy a house in Man Kung Uk, a town just off Clearwater Bay Road near Hang Hau.
They wouldn’t move back to the city, and are loving village life. “We’ve just really enjoyed it, every minute of it,” McGlynn, a senior wealth manager and financial planner with Financial Partners, says. “We have a big circle of friends in the area because a lot of people have kids of the same age.”
Brokers and developers say more and more expatriates and overseas-born Chinese are choosing to move to village homes. The demographics of the city are changing as a result – the New Territories account for 88 percent of the area of Hong Kong, but only half of its population… a statistic likely to rise.
Sai Kung and Clearwater Bay were the first places to attract large numbers of non-villagers in search of village homes. But the influx of new residents has driven up prices significantly, forcing prospective purchasers to look further afield.
Simon Tsang, a broker who specialises in property in the Tai Po area for Oriental Property Agency, says he is seeing a strong increase in demand for village homes in areas such as Tai Po and Yuen Long, the two parts of Hong Kong that have the most village houses.
“This is a new trend – previously most expatriates lived on the Peak, or in apartments on Hong Kong side,” Tsang says. “But maybe due to the economic situation or a change in company policy, they are moving to a place that is cheaper or more economical.”
For village homes, prices vary dramatically depending on the location and whether the property has a view or an in-deed garden.
There are complications involved in purchasing a village house. Banks will often not be as generous with lending on village homes – Standard Chartered, for instance, has a policy of not lending on village houses at all, though it does make the occasional exception.
Banks that do lend on the properties may only offer a mortgage of 50 percent or 60 percent of the purchase price, instead of the 70 percent that they are entitled to offer by law. The bank’s valuation of the village home also may not match the purchase price, leaving the buyer to make up any shortfall in cash.
But McGlynn was able to secure a 70 percent loan on the purchase of his village house in Man Kung Uk. He is not that worried about capital appreciation at the moment – he and his wife bought in 2006 and have no plans to sell – but they hope they will do well.
“We will live in Hong Kong for a very long time,” McGlynn says. “Prices will rise over time and we’ll pay off a fair chunk of the mortgage. And prices have risen.”
Village homes are technically called small houses and were brought into being by the Small House Policy of 1972. The law gives each male adult “indigenous villager”, who can prove he is descended from one of Hong Kong’s original families in 1898, the right to build a home of not more than three storeys, with a roofed-over area of not more than 700 square feet. There are other restrictions on the size of the balcony (not more than four feet), the size of the water tank and the thickness of the walls.
Most homes maximise the three floors of 700 square feet, so one advantage of buying a village home is that the size is standardised. Unlike private apartment blocks, where buyers should find out the net area of the apartment and calculate the efficiency ratio of any purchase, village houses have an efficiency ratio of 100 percent – only the walls are non-usable space. There are no “public areas”, clubhouses or lift lobbies to consider in the gross square footage.
But the scheme has its critics. It is obviously sexist. The think tank Civic Exchange has also stated in a white paper that the small-house policy “is fundamentally unsustainable” and should be repealed. But it notes the government shows no sign of amending the plan, and the villagers have a strong lobbying force in the form of the Heung Yee Kuk, which represents them.
There are no hard figures on how many indigenous male villagers have the right to claim a village house. But the Civic Exchange estimates the number at 240,000. There is always a backlog of several thousand villagers who have applied for land but have not yet been granted a plot.
Ending the scheme would require some kind of compensation to be paid to the villagers. The white paper estimates that if each qualifying villager was compensated for a 700-square-foot flat at a market value of HK$500,000, the bill to the government would run to the order of HK$250 billion.
Many heirs sell their right to build a house, of course, with plenty having long ago decamped to Wan Chai, Tsim Sha Tsui, Vancouver, London or Sydney. They are finding plenty of willing buyers, though any developer who sells a new village home to a non-villager must pay a premium to the government, in theoretical compensation for the concession they got on the land in the first place.
Tsang says local families will often buy or rent an individual floor in a village house, but overseas Chinese and expatriates tend to look for whole houses to buy. A village house that might cost HK$8 million to HK$9 million in Yuen Long would cost HK$10 million in Tai Po, and HK$15 million to HK$20 million in Sai Kung or Clearwater Bay.
The last areas of Hong Kong to see strong demand from “outside” buyers are near the border, in towns such as Fan Ling and Sheung Shui. But as Hong Kong companies increasingly engage in cross-border trade, and as transportation links and visa access to the mainland improve, more businesspeople are likely to decamp to those parts of Hong Kong.
“You can have a village house in Tai Po or Yuen Long, which is quite close to the mainland,” Tsang says. “So people are living there and it’s more convenient for them than having to go back to Hong Kong side.”
One issue that has not been settled is that all property leases in the New Territories run only until 2047, when Hong Kong will cease to be a Special Administrative Region of China. Neither the Hong Kong nor the mainland government has clarified what will happen to those leases, or to the New Territories, when that date comes.
But the Chinese government famously favours stability over disruption and may seek to carry those leases over. China is also establishing leasehold as the legal system of land ownership on the mainland, where the government still technically owns all land.
Click here for more on home decorating
|
