Why are Haunted Houses a Good Investment?

It has always been a taboo in Chinese culture to buy a stigmatized property, which we usually refer as haunted house in Hong Kong. Before we proceed, let’s define what a haunted house is. In Hong Kong, there is no legal definition of haunted property but the common belief is that a residential unit will be considered ‘haunted’ if an unnatural death such as homicide, suicide or accidental occurred within. And why is it a taboo? Because the Chinese believe that the negative energy from such death will cause bad Feng Shui and bring bad luck which, in turn, might invite unwanted visitors (aka ‘ghosts’) and give inhabitants bad fortune.

However, as Hong Kong property prices continue to soar in recent years, increasingly more people are getting over their negative perception and prejudice and turning to haunted properties for the purpose of self-use or investment, which surely offer an alternative for home owners and investors alike in such a pricey property market. As a matter of fact, there are even a couple of experts in town who specialise in haunted property investment. So what makes haunted properties so appealing? And is the gain really that lucrative?

>> Click here to see the haunted properties in Hong Kong

>> Related Article: Tips to Finding the Right Haunted House for Investment

Haunted Properties for Sale and Rental

The selling price of haunted properties is generally 20 to 30% lower than the market price, but it can go even lower if the death(s) was the result of a heinous crime or tragedy.

As mentioned before, though many local Chinese are reluctant to purchase a haunted house, their attitude has begun to change due to the ridiculously expensive property prices in Hong Kong. After all, it is the goal/hope of almost every Hongkonger to become a homeowner but when inflation rises at a rate that the masses cannot catch up, people are willing to explore other less expensive and unconventional options, which, in this case, refers to haunted property.

If you plan to rent out your haunted property, it is safe to say that expats, Christians and those seeking short-term stay are your target tenants. Equipped with a different mentality, some westerners don’t have any issue with living in a ‘haunted’ house, possibly because of their tendency to be less ‘superstitious’. As for Christians, they usually don’t mind the history of the property because of their religious belief. Lastly, for short-term tenants, since they are not stuck with the property permanently, they won’t get too fixated on the issue as long as they get a good deal on the rent, which is definitely lower than the market price.

However, prospective haunted house buyer should caution that in the majority of cases, banks won’t approve application for a mortgage loan on haunted properties, be sure to take this into consideration when you plan to invest in a haunted house but you should most definitely get a bank valuation to see how much the property is worth.

Haunted Houses in Recent Years

The most notable haunted house sale in recent years is that of an apartment unit located on the 17th floor of Tsuen Wan Centre, where 6 people lost their lives in a group suicide in 1996. An investor purchased the property 4 years ago at close to HK$1.2M and sold the haunted house last year on Christmas Eve to a Christian couple at HK$1.6M, making a profit of more than HK$0.4M. If the rental income during the 5 year period is also included, the return on investment is around 35%.

In October 2013, a man hanged himself in Kenswood Court of Kingswood Villa and the property was later placed for auction at an initial asking price of HK$2.85M the next year. This haunted house became the highlight of the auction and was sold after 6 bids from 4 prospective buyers

Another example involves a natural death which happened at Block 48 of City One in Shatin. An investor bought the property in 2010 at HK$1.14M and rented out the 304 sq. ft. apartment unit at HK$8,800 a month. With a rental rate of $28.9 per sq. ft., the return on investment for this haunted house is as high as 9.3%, which is far more than the average residential property.

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