If you have ever looked at Squarefoot’s haunted house database, all you see is a list of deaths due to illness, murder, suicide or accidents across the city’s residential buildings. You may wonder how it has anything to do with buying property, but this record does carry considerable weight.
In a city entrenched in Chinese tradition like Hong Kong, hardly any local will move into a place where misfortunate has previously occurred — or to put it another way, a haunted house. But with escalating property prices in recent years, the negative perception towards haunted property has changed into a positive one to a certain extent. What is the appeal of haunted flats? What’s in it for investors and buyers?
What is a haunted flat?
In Hong Kong, there is no legal definition of haunted property. But most will see it as a residential unit where any events such as murders, suicides and accidental deaths have previously occurred. In some cases, adjoining units are seen as haunted too.
Even up to now, Chinese tradition and culture is deeply rooted in our society. For example, “Worshipping the Corners” is still a common ritual before moving in. When it comes to haunted property, many see it bringing bad luck to occupiers. As a result, most haunted flats offer lower prices compared to nearby units.
The discount rate of a haunted property depends upon how notorious it is. In 2013, the 725-square foot haunted property in Kornhill, Quarry Bay, sold for $5.9 million, 15 percent below market value. The history of the daunting incident surrounding the property dated back to 1988, when a man was killed and cooked by his wife in a neighbouring unit within the same building. This complicated murder haunted the neighbourhood until now.
As haunted properties tend to have a lower resale value, the owners are inclined to cut asking prices. That could be as much as 20 to 30 percent below past market prices, but with soaring prices and limited flat supply in the market, average discounts fell to just 10 to 20 percent in the last two years. In July, a haunted flat in The Belcher’s, in western Mid-Levels, sold for $19,000 per square foot, just slightly below market rates.
But still many haunted listings enjoy special discounts in the market. In early August, a haunted flat in City One, Sha Tin was traded at $11,184 per square foot, 20 percent below market value. While this type of property has its particular appeal, homebuyers still need to think about how much mortgage they can actually get from banks or other financial institutions due to the fact that haunted properties are often regarded as high-risk investments. As for tenants, it would be more affordable to rent a haunted flat. Just make sure they won’t be affected by mental stress during their stay.
Haunted properties are unpopular among local Chinese, but that is probably not the case for expatriates or people on short-term stays. Some investors are looking to make a good rental yield by leasing their haunted flats out to potential tenants who couldn’t care less about the deaths that occurred before.
To find out whether a flat is haunted, you can see if it is significantly under-valued by banks. Alternatively, ask the building’s security guard or nearby neighbours. Don’t forget to check out the online haunted house database for more details. If you’re still feeling paranoid after extensive research and interviews, ask the landlord to include a clause that states if there was a murder or suicide in the apartment. The buyer could immediately cancel the transaction and see the full amount of the initial deposit refunded.