Priced Out of Hong Kong Homes? Try Hotel Living, Says Bernie Lo
I love hotel living. It's tidy. The sheets are changed often. The towels are fresh. I never run out of toothbrushes, shaving kits, shampoo, body wash, loofahs, bottled water, shoeshine buffers. Most importantly, I always have cotton buds to clean my ears. But I never stay in a hotel for more than a few days; it's far too expensive, until now.
Hong Kong tycoon Li Ka-shing's Cheung Kong Holdings just sold all 360 rooms in the budget range Apex Horizon hotel in Kowloon, to hundreds of enthusiastic buyers. It's been widely reported that a 600 square foot unit was going for around $385,000, 40 percent less than some of the government subsidized homes in the same district.
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Aside from the price, another lure is a loophole in the law. Because hotels are classified as commercial properties, they aren't subject to the punitive real estate purchase tax, known here as stamp duty, that can approach nearly 20 percent for some buyers of residential units.
The stamp duty varied from almost zero to 4.25 percent of the purchase price until recently, when the government slapped on an additional 15 percent surtax for non-permanent residents, in a bid to cool off catapulting prices. A flood of mainland Chinese money into the local market has been widely blamed for driving up values.
Cheung Kong insists it's just selling down an asset, and not trying to attract homebuyers. Justin Chiu, Executive Director, told the South China Morning Post that living in a hotel is different than living in a residence, and said that management bylaws may ban cooking or even changing furniture.
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As someone who spent many years living in tiny shoebox apartments with barely enough space for a mattress and a cheap IKEA sofa, I can attest that Hong Kong is teeming with people who can't be bothered to cook or worry about interior decor.
Because this is the first time hotel rooms have been sold to individuals, it's a novel test case, and questions abound. Nobody knows how many of the buyers plan to reside in the rooms. The Hong Kong Institute of Surveyors says technically it's illegal for an owner to use them as homes.
Citic Securities' says management fees could be uneconomically high, and owners might be liable for taxes on hotel revenues. The uncertainty has led to lawmakers asking Cheung Kong and the government to explain the reasoning behind the sales.
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I like the creature comforts of short hotel stays, so I hope buyers of the Apex Horizon rooms realize that someone has to pay for those nice amenities like fresh sheets, towels, and bath salts, and, that after this deal, they won't be free.